CARES Act provides Unemployment Benefits for Self-Employed and Independent Contractors – but WHEN?

April 3, 2020

This will be the first in a series of posts on this very important topic because there is still so much we don’t know YET; we will provide updates as they become available.

It has been all over the news this week that the CARES act included expansion of unemployment benefits to those who don’t normally qualify, an increase in the amount of weekly benefits, an increase the total amount of weeks an individual can accept unemployment, AND an additional “stimulus” $600 per week payment – in addition to regular unemployment benefits. Not all these expansions will apply to every individual who is financially impacted by the COVID-19 crisis. The following, however, are some important points most applicable to the self-employed (SE) and independent contractors (IC):

  1. The Wisconsin* Dept. of Workforce Development, Unemployment Division (WI DWD-UI) is the department who must handle the unemployment claims. It’s a bit confusing, but the CARES Act is a Federal Government mandate; however, the States must still implement the unemployment directives, including processing unemployment applications and making benefit payments.
  2. Most SEs and ICs fall into a category of “not eligible before the CARES Act for unemployment benefits.” The CARES Act created a new benefit program called “Pandemic Unemployment Assistance” (PUA) meant to include most impacted SEs and ICs. For this article we will reference PUA when there is a difference between routine unemployment benefits and PUA benefits; otherwise “benefits” will refer to all payments through unemployment.
  3. Both PUA and routine UI benefits are designed to include those who have suffered a loss in hours or income due to the COVID-19 shutdowns; this means even if you are still earning something, but it is less than your regular income (often referred to as “underemployment”), you might be eligible. APPLY if you think you might qualify.
  4.  The WI DWD-UI is not yet ready to accept applications for those who qualify under PUA (which is MOST – but not all – SE and ICs). This means if you are only eligible for unemployment under PUA, you will not be able to receive any for benefits, including the additional $600 “stimulus” amount, YET. Don’t panic!
  5. This also means if you already applied with WI DWD-UI, and PUA is your eligibility ticket, your claim was most likely be denied. DON’T LET THAT DISCOURAGE YOU. The WI DWD UI website states it hopes to have the guidance from the Federal Government in order to handle these applications by mid to late April. This website is going to be your best resource for when the DWD will be ready to accept applications. Monitor it and reapply. Seriously, don’t panic!
  6. The AMOUNT of PUA benefits an individual may expect to receive is not a precisely known amount. Instead, it is going to be based upon a formula that incorporates self-employed income reported in previous tax years, balanced against certain State and/or Federal minimum amounts, and/or payroll records, if any exist. The formula will also likely take into account if you are still earning some income from your SE/IC situation, but more information needs to be reviewed before we can make this conclusion. If more guidance or clarity is provided on these formulas, we will share them in subsequent postings.
  7. Once an individual is able to receive benefits, the amount should be in addition to the $600 weekly “stimulus**.” However, at this time, the stimulus payments are not available for distribution. It is also not yet clear if this “stimulus” payment will be reduced in circumstances where the individual is underemployed versus unemployed.
  8. Remember when we told you not to panic? The understanding is that all unemployment benefits – UI, PUA and/or stimulus, once available, WILL BE retroactive to the first date of unemployment (or underemployment) caused by the COVID-19 shutdowns. The traditional one week “waiting period” that usually must occur between the event of employment loss and receiving benefits is waived for the COVID-19 applicant.

Bottom line, relief through these benefits should be coming. Perhaps not as soon as we need them, nor in line with what may have been “promised,” but we should know more in a few weeks.

*This article targets individuals who live and work in Wisconsin. If you live and/or work elsewhere, you might consult your State’s unemployment division for help.

** The $600 additional stimulus unemployment benefit should not be confused with the Government’s (up to) $1,200 “recovery rebate,” which many are calling a “corona stimulus check.” This recovery rebate is a separate part of the CARES Act, not discussed in this post.

1. The information above does not constitute legal advice, nor does it create an attorney-client relationship. Please consult your attorney with specific questions.
2. As this situation is constantly changing, we will make every effort to stay current on this topic, however this information is provided as general guidance and may not apply to your situation, nor should it be relied upon exclusively. Please consult and confirm with your attorney if you have questions about these updates or their applicability.  
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Copyright 2020 *Law Offices of Lindsey King*, All rights reserved.*

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