Did you know that independent contractors, freelancers, and temps can, in some cases, collect unemployment? I sure didn’t until read this New York Post story by Sheila McClear.
Say you’ve been working as a contractor with BigExpensiveStuff Inc to develop and implement a new marketing strategy. Times have been tough for BigExpensiveStuff over the past year and they notify you that they no longer require your services. If you apply for unemployment, the Department of Labor (DOL) will look at whether, in fact, you should have been treated as an employee instead of a contractor. If they determine based on IRS guidelines that your role looks more like the former than the latter, you may qualify for unemployment.
Now all this may be good news if you’re the contractor or freelancer, but it’s bad news for the company you worked for. If DOL votes in your favor, your former employer may be on the hook for the unemployment taxes (and other benefits) they should have been paying. Even worse, the incident may trigger an audit of their other contractor relationships.