Independent Contractors Whose Businesses Are Hurt by COVID-19 to Get Unemployment Benefits Under New CARES Act

, , , , , News, The Cullen Law Firm, PLLC

 

The Relief for Workers Affected by Coronavirus Act, a portion of the CARES Act, signed into law on March 27, 2020, provides two primary types of relief to American workers hurt by COVID-19: (1) expanded unemployment assistance and coverage; and (2) cash payments.

1.  Expanded Unemployment Assistance – Even to Owner-Operators.

The CARES Act sets out a greatly expanded unemployment assistance program for persons affected by COVID-19 that is carried out using existing state unemployment frameworks. For states that join the new federal program, the new law expands the scope of state unemployment benefits in multiple ways. First, the law increases the number of people eligible for assistance. Second, it increases the amount of benefits paid.

The CARES Act expands the categories of workers who may get unemployment assistance to include self-employed persons, independent contractors, and other gig workers who normally would not be eligible for benefits. The law covers most all persons whose work has been negatively affected by COVID-19, including persons who are unable to work because: they have been diagnosed or quarantined, a member of their household has been diagnosed, they have become a primary caregiver for children whose school has been closed due to COVID-19, their place of work has been closed due to COVID-19, and others. It includes both unemployed and underemployed individuals.[1] The coverage expressly excludes persons able to telework and persons receiving paid/sick leave.[2] Individuals seeking assistance must certify that they are unable to work due to the COVID-19 pandemic, and all assistance is provided by the relevant state unemployment agency. The new law also covers persons who are not able to receive unemployment assistance because they had previously exhausted their unemployment benefits.

The amount of assistance is the state’s normal weekly assistance amount (subject to a federal minimum) plus an additional $600 per week.[3] Thus, for example, if state unemployment programs provide a particular person with $400 per week in unemployment benefits, that individual would be eligible to receive $1,000 per week if COVID-19 caused that person’s un- or underemployment. The law also waives the usual 7-day waiting period for benefits.[4] Recipients can receive up to 39 weeks of assistance (although the additional $600 assistance is only available through July 31, 2020 for certain recipients), and persons whose work was affected by COVID-19 starting on January 27, 2020 are eligible.

2.  Cash Payments

The CARES Act also provides for cash payments in the form of tax credits for the 2020 tax year which are payable immediately.[5] The full amount of these payments, $1,200 per individual ($2,400 for joint filers), are available for persons with adjusted gross incomes up to $75,000 ($150,000 for joint filers).[6] The payments decrease for persons with adjusted gross incomes over those amounts and phase out completely at $99,000 for individuals and $198,000 for joint filers. Persons also receive $500 per child dependent. The payment classifications are based on 2019 AGI (or 2018 AGI if the person has not yet filed their 2019 tax year return).[7]

Payment will be made by direct deposit for persons who chose to have their tax refunds delivered by direct deposit in 2018 or later.[8] Other means of payment have not yet been determined.

To find out more about how your state will administer these benefits, you can find your state office from this page sponsored by the U.S. Department of Labor:  https://www.careeronestop.org/LocalHelp/UnemploymentBenefits/find-unemployment-benefits.aspx  We welcome you to share with us your experience with these benefits.

[1] § 2102(a)(3)(A), (b)

[2] § 2102(a)(3)(B)

[3] § 2102(d); § 2107(a)(4)

[4] § 2105(b)

[5] § 2201(a)

[6] New § 6428(a), (c)

[7] New § 6428(f)(1), (5)

[8] New § 6428(f)(3)

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