California’s Independent Contractors Should Not Apply For Federal Jobless Benefits Yet, State Employment Agency Says

Updated April 9, 5:29 p.m.

For weeks, millions of self-employed Californians, independent contractors and some workers in the gig economy have watched their job prospects and income vanish with the spread of the coronavirus. 

But when President Trump signed a $2 trillion relief package in late March, the deal included some hope in the form of $600 per week for these non-traditional workers who are typically shut out of many jobless benefits. 

Now, nearly two weeks later, many in this workforce must wait even longer just to apply for that relief.

The California Employment Development Department, or EDD, said on Tuesday “the self-employed and those who are truly independent contractors” should not yet file unemployment claims because the state agency still hasn’t established the program needed to channel the federal money to them. 

“We have a dedicated team working around the clock with state partners to build this new program as quickly as possible, but for right now, we ask this group of claimants to please await further instructions before filing a claim for unemployment benefits,” EDD said in a written statement.

This comes after President Trump signed the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act. The $2 trillion relief package offers $600 per week in unemployment assistance through July to this segment of the workforce along with part-time workers, if they’ve lost income due to the outbreak. 

On top of the $600 per week, these workers — many of whom traditionally have not qualified for any jobless benefits when they lose work — are also eligible for half their state’s weekly average unemployment insurance payment, which in California is $333.

Late last month, just after the CARES Act was signed, an EDD spokesperson said the agency did not have any guidance on whether the self-employed and independent contractors should apply right away for the funds or hold off. 

The U.S. Department of Labor issued guidance to states this week on how to implement the program. But state employment agencies across the country have struggled to get the complex new benefit program started, leaving millions without the chance to even apply. It can take weeks for people to receive the money once they apply for it. 

The money is provided through a new federal program called the Pandemic Unemployment Assistance, or PUA. In its statement on Tuesday, the state employment agency said that the new federal program is for the self-employed “and those who are truly independent contractors.”

Though EDD is asking the self-employed and independent contractors to hold off on applying, the agency and state Labor Secretary Julie Su have also said all workers “have the right” to file for unemployment benefits. 

That includes workers who might have been misclassified by companies as independent contractors, Su said on Twitter late last month.

“If you’ve lost your job or have had your hours reduced, we’ll figure out whether or not you’re misclassified, and determine if you’re owed benefits,” she said. 

“If you are unsure if you are an independent contractor or an employee who could be eligible for benefits,” EDD added, “then you are still encouraged to apply for regular Unemployment Insurance as instructed in our FAQs under the Unemployment Insurance Benefits section.”

Assemblywoman Lorena Gonzalez said Wednesday on Twitter that many so-called gig workers “are misclassified under AB5 and can apply” for unemployment.  

Gonzalez authored AB 5, which went into effect in January and seeks to compel companies, including Uber and Lyft, to treat more of their workforce as employees rather than contractors. 

Earlier this week, Gov. Gavin Newsom said more than 2 million Californians have recently filed for jobless benefits. The state’s employment agency said it had processed 878,000 unemployment claims in the week ending March 28. That was up 370 percent from the week before. 

Statewide, there are an estimated 2 million self-employed people and 3.4 million who work part-time. Millions more work in the gig economy as delivery and rideshare drivers, freelance writers and musicians.

“These non-traditional workers comprise as much as one-quarter of all workers in the state,” California Sen. Dianne Feinstein said in a press release late last month. 

On Thursday, Newsom announced that California workers who are already receiving unemployment benefits will get an extra $600 on top of their weekly amount starting on Sunday. This money will come from the Pandemic Unemployment Assistance program, which is part of the massive federal recovery package. 

The same day, EDD said it was still developing the program for self-employed workers and contractors. 

“This complex program to serve those who don’t usually qualify for regular Unemployment Insurance (UI) benefits, including businesses and the self-employed, has to be developed and could rival the size of the current UI program EDD administers for unemployed workers,” the agency said on its website.

EDD added that it has launched a separate Pandemic Unemployment Assistance web page that will update its “around-the-clock effort to build this new program from the CARES Act.”