Unemployment Relief For Independent Workers With Mixed Income Types

Fix The UI / PUA Problem for Hybrid Income Earners

Traditional Unemployment Insurance (UI) has long paid benefits to W2 employees who lose their jobs. In the wake of COVID-19, the federal CARES Act introduced Pandemic Unemployment Assistance (PUA) and marketed this program to self-employed individuals, gig workers, etc. to pay similar benefits for lost income related to 1099 self-employment.

People could receive UI or PUA, but not both. For someone earning 100% of income via W2, UI is the answer. For someone earning 100% of income via self-employment/1099, PUA is the answer. The problem lies with hybrid W2/1099 workers, or those who earn income as a combination of W2 employment and 1099 gig work / self-employment / contracts.

The table here illustrates the benefit problem caused by the UI vs PUA gap.

Here is how this affects each type of worker:

W2 Only: An employee earns $80,000 annually from a W2 employer as their sole source of income. This employee is eligible for UI and will receive up to $450 in weekly UI benefits.

1099 Only: A gig worker or independent contractor earns $80,000 annually through a series of 1099 earnings. There is no W2 source of income. This self-employed person is eligible for PUA and will receive up to $450* in weekly PUA benefits.

W2/1099 Hybrid: A person primarily derives income from self-employment, amounting to $75,000 per year. This person has a part-time seasonal W2 side job, earning wages of $5,000 annually. This person is only eligible for UI and will receive $52 in weekly UI benefits. This person cannot claim PUA due to the W2 job and UI benefits are calculated solely on the W2 wages.

Each of these three individuals earns $80,000 annually yet Person 3 is unable to achieve parity in benefits due to poorly constructed laws, policies or procedures.

Close the Gap! At the very least, allow Person 3 to opt out of UI and choose PUA!

While we are all grateful for receiving what funds are being made available to us, we would like to process to be a just one for all citizens of the United States.

Thank you for your consideration, support, signature, and sharing.

*From the California EDD PUA webpage: Once we are able to complete further programming, we will be able to increase the benefit amount to a maximum of $450 per week if you earned more than $17,368 in 2019.

Update 5/11/2020

Our initial petition text is still accurate and accessible, but we wanted to include the language currently in front of Speaker Pelosi and Leader McCarthy here as well:

Dear Speaker Pelosi and Leader McCarthy:

Thank you for your efforts to pass the CARES Act in March, legislation that provides a crucial foundation for our response to the coronavirus crisis and that is providing desperately needed relief to millions of Americans and small businesses.

During consideration of the CARES Act, we wrote to you to request that emergency unemployment benefits be made available to freelancers, contractors, and other independent workers who have lost in-come as a result of the pandemic. We are very appreciative that the CARES Act included the new Pandemic Unemployment Assistance (PUA) program, extending benefits to independent workers who lack the resources of a large employer but do not fully qualify for regular unemployment.

However, while PUA has begun providing support to many previously ineligible workers, as currently constructed many independent workers with multiple sources of income are excluded from fully qualifying for its expanded benefits. This includes workers with mixed employment types and multiple sources of income who have lost income but are not fully covered by either regular unemployment or PUA.

In particular, due to the sporadic and unpredictable nature of work in film, television, theater, and music, many professionals in the entertainment industries earn a living through a combination of traditional (W-2) and independent (e.g. 1099) employment. As a result, even if they have lost a substantial source of income due to coronavirus-related disruption of their independent work, these workers are ineligible for PUA. Some of these workers may qualify for regular unemployment compensation if they have also lost their W-2 work, but this can significantly under-measure their true earnings. And those whose W-2 income has continued but only represents a small portion of their earnings—for example, a worker who receives residual income from a previous project—are left with greatly reduced income yet are ineligible for any unemployment assistance.

As you consider additional legislation to respond to COVID-19, we urge you to consider language to ensure that independent workers with mixed sources of income are able to access the same relief to make up for lost work that the CARES Act provides to those with more traditional employment arrangements.

Thank you for your consideration and your leadership through these difficult times.