What is a 1099 Contracted Employee?
A 1099 contracted employee, also known as an independent contractor or a freelancer, typically provides a service to a business without being a traditional employee. They receive a 1099 form for their tax return instead of the W-2 form that regular employees get.
How does Unemployment Insurance work for 1099 Contracted Employees?
Traditionally, 1099 contracted employees aren’t eligible for Unemployment Insurance (UI) under California law because they are considered self-employed, and their clients don’t pay into the unemployment insurance fund on their behalf as employers do for W-2 employees.
What changed?
Given the unique circumstances presented by the COVID-19 pandemic, temporary programs like Pandemic Unemployment Assistance (PUA) were created at the federal level to provide benefits to freelancers, independent contractors, and other self-employed individuals who wouldn’t usually be eligible for regular UI benefits.
PUA, part of the CARES Act, ended in September 2021. However, paying attention to other special programs that might become available in the future is essential.
So, what now?
If you’re a 1099 contractor looking for Unemployment Insurance, you should:
- Check Your Eligibility: Refer to the EDD page about eligibility for UI in California.
- Check for special programs: If there’s an ongoing economic crisis, there might be federal programs that make exceptions for 1099 workers. For example, the PUA page on EDD’s site has information about how contractors were covered during the pandemic.
- Apply for Unemployment Insurance: If you determine you’re eligible or have special provision programs in place, you can apply for benefits directly on the California EDD website: EDD UI Online.
Remember, this is your best bet for current information, and it’s always a good idea to seek advice or guidance from a professional tax advisor or lawyer if you aren’t sure. These rules can change, so always check the EDD website for the most recent information.
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