Can Independent Contractors Collect Unemployment?

Learn more about how independent contractors can collect unemployment benefits.

Updated on January 9th, 2023

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During the COVID-19 pandemic, the federal government launched relief legislation that allowed various independent contractors to qualify for unemployment benefits. These federal unemployment benefit programs expired in September 2021 and are no longer viable. However, unemployment benefits are still paid to eligible claimants, including some independent contractors.

Contractors Eligible for Unemployment Benefits:

Typically, unemployment benefits are only granted to employees whose employers pay state and federal unemployment taxes to fund the unemployment system. As an independent contractor, neither you nor your clients or customers pay state or federal unemployment taxes.

However, employees can qualify for unemployment benefits if they have been misclassified as independent contractors.

Misclassification as an Independent Contractor:

Generally, independent contractors work for multiple clients on a project basis, while employees are usually hired to work on an indefinite basis, either part-time or full-time. If you believe your employer misclassified the type of employment services you provided, you can appeal for an unemployment determination through your state unemployment office.

The Pandemic Unemployment Assistance (PUA) Program:

During the COVID-19 pandemic, independent contractors were eligible to receive up to 79 weeks of unemployment insurance payments through their state unemployment agency. Contractors were only eligible for PUA benefits if they did not qualify for regular UI benefits or had already exhausted their state benefits.

The PUA program ended in September 2021.


Do independent contractors qualify for unemployment insurance?

Typically they do not, since unemployment benefits are only granted to employees whose employers pay state and federal unemployment taxes. However, during the COVID-19 pandemic, independent contractors qualified for PUA benefits, but this service expired in September 2021.

Do independent contractors qualify for Federal Pandemic Unemployment benefits?

All UI recipients, including independent contractors, were eligible to receive an additional $300 per week over and above any state benefits they receive, until September 2021.

Who is not eligible for unemployment insurance under the CARES Act?

  • Individuals who are able to work from home or run their business from home.
  • Anyone receiving sick pay, family leave pay, or state employment benefits.
  • Independent contractors and self-employed individuals who choose not to work for reasons not relating to COVID-19.