Gig Workers on Unemployment: Best of Both Worlds?

In the wake of the COVID-19 pandemic, more than 48 million Americans have applied for Unemployment Assistance. Freelancers, gig workers, and independent contractors, who wouldn’t usually qualify for unemployment benefits when they lose their jobs. In March of 2020, the federal Coronavirus Aid, Relief, and Economic Security Act (CARES) Act extended Pandemic Unemployment Assistance to America’s estimated 23 million independent contractors such as rideshare drivers for Uber and Lyft, for example. While there are many supporters of financial assistance for gig workers, others claim that because gig workers are classed as independent contractors and not employees, that this makes them ineligible for unemployment assistance. But perhaps the real issue here is the underlying larger issue, which is an opportunity to make gig work in the United States better for everyone, independent contractors, hirers, and consumers.

How Do Workers Benefit from the Gig Economy?

The most obvious answer to this question is that gig works retain increased flexibility to choose contracts that are in line with their interests, goals, and experience. Gig work also allows them to earn income from multiple sources. Working on multiple projects or for different organizations also allows gig workers to quickly expand their skill set.

How Do Companies Benefit from the Gig Economy?

There are also benefits for businesses large and small who hire gig workers. This allows them to hire experts on a temporary, as-needed basis. Gig workers also provide corporations with flexibility when it comes to scaling their workforce up or down to meet fluctuations in business demand. Not to mention, it lowers overheads such as office space costs and healthcare and other benefits.

The Challenges of the Gig Economy

For independent contractors there are significant challenges. One of the downsides to not having a regular employer is that gig workers often worry about job security and income predictability. They are also more likely to dip into their savings when regular work is not available. Gig workers are also excluded from other labor rights afforded to traditional workers, such as minimum wage, overtime rates, paid time off, employment insurance coverage, employer contributions to retirement plans, and health and maternity benefits all of which adds to the overall insecurity of gig working.  

Pandemic Unemployment Assistance (PUA)

You may qualify for PUA if you are not eligible for regular state or federal unemployment assistance and are available for work but are partially or fully unemployed because:

  • You have tested positive for COVID-19 or are unable to work because you have symptoms and you are awaiting results of a test

  • A family member in your household has been diagnosed with COVID-19

  • You are taking care of a family member with COVID-19

  • You are caring for a child whose school or childcare facility is closed due to COVID-19

  • You are unable to get to your work because of an imposed COVID-19 quarantine

  • Your healthcare provider has advised you to self-quarantine

  • You have been unable to begin a new contract because of a COVID-19 emergency

  • The death of the head of household due to COVID-19 has caused you to become the primary breadwinner

  • You were unable to fulfill your contract due to COVID-19

  • The place you were working has closed down due to COVID-19

Bear in mind that you will still not qualify for PUA if even if you meet the above criteria if you are receiving paid leave or you can still work from home.

In theory, the PUA is meant to provide independent contractors who have lost gigs due to COVID-19 with a portion of their weekly income, up to the state maximum threshold plus and additional temporary bonus of S600 per week for those receiving federal and state unemployment. In practice, many gig workers received much less under PUA. The reason for this is that many gig workers also have W-2 income from a part-time or temporary job. In this situation, these workers fall into the traditional unemployment assistance system and only their W-2 earnings are taken into account to determine their benefit entitlement.

Perhaps the solution is to address the fact that workers no longer clearly fit into one of the two categories anymore and to recognize that they are many hybrid workers who are suffering financial hardship due to COVID-19 but are restricted in their access to unemployment assistance because of the way they work. 

Leave a Reply