November 16, 2009

Contractors Can Collect Unemployment

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.

Pink Slip

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.

Click here for the full story.

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3 Responses to Contractors Can Collect Unemployment

  1. Janine says:

    I found this article very interesting, and hopeful. Hear me out. I was hired in Dec 2010 and had a Letter of intent (LOI which also states I have a salary) by the owner of a company in Germany. The US branch is in California. I live in Massachusetts. I sent my resume and my W2 to the boss in CA and started working for him, and I have been receiving my checks from that part company. My boss in CA was paying my full Cobra benefits (from the job I left for this one) until recently, now he only pays 1/2 of the benefit. I pay the other 1/2. I work at home 8-10 hrs a day sometimes more, fly to FLL for training, and travel with expenses paid to promote and train other offices to use our software. I am given tasks to do with deadlines, work specific hours when I am out training others and I have a computer they furnished by the German headquarters. I also have business cards. So it sounds like (under normal circumstances) if I am laid off there is a chance I will qualify for unemployment. The question is with my boss living and working on the West coast and me on the East coast will still I qualify for unemployment ?

  2. marie says:


    I wanted to ask you something? Do you have any data on Unemployment for contractors? I work for as a contractor doing admin duties in a government agency are you saying that I would not get unemployment?

  3. tailspin45 says:

    If you are a contractor, no, you are not eligible for unemployment as far as we know. On the other hand, if the IRS thinks you should have been classified as an employee according their guidelines, then you are eligible for unemployment.

    If you’re in California and you breath then you probably should be considered an employee—that’s not a legal opinion, of course, but that’s the way we read the issue when we ran a company in the San Diego area.

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