Can I Collect Unemployment If I'm Self-Employed?

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Can you collect unemployment if you are working as a freelancer, independent contractor or self-employed individual running your own business?

Unemployment Benefits for Self-Employed Workers

In most cases, self-employed workers, independent contractors and freelance workers who lose their income are not eligible for unemployment benefits.

Employers contribute to a fund for unemployment benefits, and if you are operating as self-employed, you probably didn't pay into your state's unemployment fund.

If you were paid as an independent contractor and receive a 1099 form, you were not considered an employee and would not be eligible for unemployment. That's because eligibility for unemployment is based upon being employed by an organization that was paying into the unemployment insurance fund.

Check Your Eligibility

Eligibility varies from state to state, so if you're not sure whether you're eligible, check with your state unemployment office to determine your eligibility for unemployment compensation. You will find information on who is eligible for unemployment in your state, and how to determine whether you can collect.

When Self-Employed People Can Collect

There are some circumstances where self-employed workers may be able to collect benefits.

  • State unemployment law may provide for eligibility for benefits in some circumstances.

Self-Employment Assistance Program

There is a federal government Self-Employment Assistance program which offers unemployed workers in some states unemployment benefits when they are starting a business. The Self-Employment Assistance Program pays a self-employed allowance, instead of regular unemployment insurance benefits, to help unemployed workers while they are establishing businesses and becoming self-employed.

When You're Already Collecting Unemployment

If you are collecting unemployment based on a job you had, working freelance can impact the benefits you are receiving. For example, in NY, you need to report when you:

  • Do freelance work
  • Are self-employed
  • Start a business or
  • Do "favors" for another business

There are similar requirements in other states. In addition, in order to claim benefits you need to be ready, willing and available for work so if you are doing other work you may not qualify.

Suggested Reading: What Are Unemployment Benefit Disqualifications? | Qualifying for Unemployment Benefits

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