When I tell people that I work for myself, it's not uncommon for them to say they’d be scared to enter the workforce on their own. In some ways, this makes sense: There's still a stigma attached to freelancing that frames it as an unstable way of earning a living.
However, it's worth noting that conventional jobs are also vulnerable during economic volatility. The wave of tech layoffs that have been happening since 2023 has resulted in many high-skill professionals going out on their own. Data gathered for Upwork’s Freelance Forward survey in 2022 illustrated that many freelancers cite increased stability as a key reason for going solo, demonstrating that the benefits of holding a traditional job might not be cutting it anymore.
As a freelancer, I appreciate my work-life balance and the fact that I collaborate with clients who share my values. This keeps my work interesting. However, during slow periods, making ends meet can be a concern. Each state has different rules regarding workers' classification and, in turn, what benefits they are entitled to, which can affect whether or not they can get unemployment when they lose a client or work gets slow. While this is unfortunate, that doesn’t mean getting unemployment as a freelancer is impossible.
How to figure out if you're eligible for self-employment
To get unemployment benefits, independent contractors must meet eligibility requirements, which vary by state.
Here are a few key things that can help you determine whether or not you can receive unemployment benefits in your state.
Nail down your employment status
Are you a part-time gig worker, an independent contractor with an LLC, or a W-2 employee with a side hustle business? Maybe you fit into multiple categories. No matter what, knowing how to define your employment status is essential because it may affect your eligibility for traditional unemployment benefits. If you’re really not sure, the ABC test, which is currently used in 33 states, can help you figure out your classification or, in some cases, if you’ve been misclassified.
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Keep track of your work history
Before you start filling out a UI claim, determine whether you meet the work history requirements set by your state's unemployment insurance program. Directories and helpful guides are directly on The U.S. Department of Labor website.
It’s also important to remember that, when they file, freelancers may be required to prove that they:
- previously provided a payable service, and
- are no longer providing this service.
For example, in California, self-employed workers can be granted elective coverage as long as they provide documentation of previous services and wages.
Check to see if benefit programs have been updated
Every so often, I take a moment to check for any changes to unemployment benefit programs, such as the “Freelance isn’t Free” Act, which has been passed in several states, including California and New York. Staying aware of changes in your state is a great way to maximize your benefits and be sure a client or contract isn’t taking advantage of you.
During the early days of the COVID-19 pandemic, several programs were implemented to benefit self-employed workers. While the CARES Act and PUA (Pandemic Unemployment Assistance) expired in 2021, the momentum to improve benefits for sole contractors doesn’t seem to be slowing down. Deloitte and MIT's 2022 Workforce Ecosystem study, for example, found that 82% of organizations are investing in integrating independent workers in addition to traditional employees.
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Navigating state-specific benefits
There isn’t a federal government program for unemployment. If you’re out of work, the best place to start is at the state level. You can find information specific to your state by visiting the website of that state's unemployment office.
For example, here are:
- New York’s unemployment website
- California’s unemployment website
- Virginia’s unemployment website
- Washington State’s unemployment website
On your state’s website, you can typically find information on eligibility requirements, application procedures, and contact information for assistance.
As self-employed individuals, we need to be prepared, monitor legislative changes, and thoroughly investigate the requirements for receiving unemployment benefits.
Additional resources for freelancers
Before filing an unemployment claim, prepare yourself to make the best case possible so you are more likely to receive benefits.
Here are a few resources where freelancers can find more information about unemployment:
- Freelancer Union: The Freelancers Union is one of the more well-known advocacy groups supporting sole contractors of all kinds. Offering education and services, the Freelancer Union is a great place to start and also offers a Freelancer’s Relief Fund if you’re really in a pinch.
- Freelance Solidarity Project. A wonderful resource for freelance digital media workers at any stage in their careers, the Freelance Solidarity Project contains a wealth of tools and knowledge to help independent contractors know their rights and correct job classifications.
- USA.gov. While this government website will outline what we’ve previously covered, like state benefits, it can also help point you in the direction of health insurance resources since the loss of a client may mean you have to make a few (hopefully temporary) changes in your health care plan.
- School for Freelancers. A dynamic online community that provides videos, workshops, a blog (and this very handy rate calculator!), and other resources to help freelancers at all stages build their careers through education and support.
These organizations also help self-employed workers learn more about freelancer’s unions, which can be a great way to build community and get advice, especially if you’re just starting out.
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What to know before you file a claim
Let's say you’re unemployed and ready to file a claim. Before you put pen to paper (uh, keyboard to screen?), ensure you can answer these questions.
- What is your previous income? This answer isn’t always straightforward for freelancers, but keeping track of your earnings will pay off. Previous income helps the powers that be determine how much your benefit package will be. It's worth keeping a log of your expenses and income in case they are needed when making your benefits case, so bust out that Excel sheet — or use Keeper to track your expenses.
- How much will you get? This depends on where you live and your previous salary. Check out this benefits calculator to help you determine what amount you might receive.
- How much can you work while receiving benefits? Unemployment benefits might not be enough to live on, but most unemployment programs allow you to work while collecting. While it’s often state-specific (in Rhode Island, people receiving UI can earn up to 50% of the weekly payment before any earnings are subtracted from their benefits), many UI programs allow for a partial benefit plan, which is designed to help workers whose hours have been reduced.
Even as a traditional employee, getting on unemployment can be challenging and lengthy. However, with a solid understanding of the requirements, you can enhance your chances of receiving assistance during tough times, which can happen to anyone.
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