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Massachusetts Latest State to Accept Unemployment Applications for Self-Employed, 1099, Gig Workers

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On April 20, Massachusetts and its Department of Unemployment Assistance (DUA) became the latest state to announce that it was ready to accept unemployment applications from workers affected by COVID-19 that are ordinarily ineligible for unemployment benefits – including the self-employed, independent contractors and “gig” workers.  The ability of these workers to apply for and potentially receive Pandemic Unemployment Assistance (PUA) comes courtesy of the CARES Act, passed into law March 27 and includes (among other provisions) expanded unemployment benefit eligibility and funding.  Most states have been scrambling to update their systems to accommodate these new claimants, with many still in the process of doing so (Rhode Island, for example, has been up and running since April 7, but Connecticut is not expected to be ready until April 30).

To qualify for PUA benefits, an individual must not be eligible for regular unemployment benefits and be unemployed, partially unemployed, or unable or unavailable to work because of certain health or economic consequences of the COVID-19 pandemic.  The PUA program provides up to 39 weeks of benefits, which are available retroactively starting with weeks of unemployment beginning on or after January 27, 2020 and ending on or before December 31, 2020.

The CARES Act also provides for:

  • Pandemic Emergency Unemployment Compensation (PEUC) – Up to 13 weeks of additional unemployment benefits for individuals who have exhausted all rights to benefits under regular unemployment compensation, and;
  • Federal Pandemic Unemployment Compensation (FPUC) – An additional $600 per week for individuals collecting unemployment benefits, ending with weeks of unemployment ending on or before July 31, 2020.

In the rush to file unemployment claims, many independent contractors may have either inadvertently reported themselves as employees or believed that they are indeed employees of the company they were performing work for.  Employers receiving unemployment claim notifications from their state unemployment agency should be especially attentive to these claims.  Bona fide independent contractors are not employees and as such an employer is not responsible for their unemployment insurance coverage or costs (or any other employee coverage such as benefits).  Employers would be well served by reviewing all independent contractor engagements and asking the following questions:

  • Do the independent contractors
    • decide how their work is performed?
    • have other clients?
    • provide their own tools/equipment?
  • Does a written agreement exist?

Note that the outcome of an independent contractor analysis can potentially impact an organization in far more ways than just unemployment costs.

Regardless of whether claims are being submitted by independent contractors or not, employers should always pay close attention to any state unemployment agency notifications, including wage/earnings requests and determination notices  Not responding in a timely fashion may result in an employer’s inability to contest a claim, resulting in unnecessary costs to the organization in the way of higher insurance premiums.

For a list of all state unemployment agencies and contact information, visit https://www.careeronestop.org/LocalHelp/UnemploymentBenefits/find-unemployment-benefits.aspx

COVID-19 Business Resources

Frank Levesque, SHRM-SCP is a Director at blumshapiro, the largest regional business advisory firm based in New England, with offices in Massachusetts (including Newton, Quincy, Boston, North Andover, and Worcester), Connecticut, Rhode Island and Virginia. The firm, with a team of over 500, offers a diversity of services, which include auditing, accounting, tax and business advisory services. blum serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies. Frank can be reached at flevesque@blumshapiro.com.

Disclaimer:  The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation.

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