In 2021, the CARES Act was passed to ensure that small businesses and self-employed people affected by the COVID-19 pandemic could receive unemployment benefits through the Pandemic Unemployment Assistance (PUA) program. However, the program expired in September 2021.
Typically, small business owners aren't able to collect unemployment since they don't pay unemployment taxes and aren't W-2 employees.
The Pandemic Unemployment Assistance Program:
The PUA program allowed small businesses to receive an amount based on their previous income, along with an additional $300 per week from the federal government for a period of four months.
Eligible persons were part-time workers, freelancers, gig workers, self-employed workers, and independent contractors (sole proprietor or single-member LLC). Those who were not eligible included workers that were able to work or operate their businesses from home and those who voluntarily closed their businesses for reasons not related to the coronavirus.
In September 2021, the program expired.
Can Small Business Owners File for Unemployment?
Generally, small business owners wanting to claim unemployment benefits have to follow the guidelines of the state in which they operate and are employed. In most cases, sole proprietorships are not eligible for unemployment because they don't pay unemployment taxes and aren’t W-2 employees. This is also often the case with LLCs and partnerships.
Which workers got unemployment benefits through the CARES Act?
All workers including:
- Gig workers.
- Self-employed individuals.
- Independent contractors.
Who was not eligible for unemployment under the CARES Act?
- Anyone who can work from home or run their business from home.
- Anyone receiving paid sick leave or family leave.
- Independent contractors and self-employed individuals who close their businesses for reasons not relating to the coronavirus.