On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act (the “CARES Act”). The CARES Act includes a number of components intended to help individuals who are impacted by the COVID-19 crisis, including expanded unemployment benefits, cash payments to individuals, and changes to student loan repayments. As part of the vast stimulus package, unemployment insurance will extend to the self-employed, contractors, and freelancers who cannot work or had hours cut because of the pandemic. So, how might this legislation impact you directly?
Unprecedented unemployment benefits for freelancers
The CARES Act includes an expansion of unemployment benefits to help make up for a gig worker’s lost paycheck. The self-employed, independent contractors, and freelancers have historically been ineligible for a number of federal and state protections. As part of the Pandemic Unemployment Assistance, people who lose work due to the outbreak of Covid-19 (including self-employed, part-time workers, freelancers, contractors) can now be eligible for benefits. With the population of freelance workers growing (on track to reach nearly 50% of the workforce this year), this is a revolutionary change. Unemployment benefits are managed at the state level so the amount you might be eligible to receive varies by state. According to a recent New York Times article, “The average worker earns about $1,000 a week, and unemployment benefits often replace roughly 40 to 45 percent of that. The expansion will pay an extra amount to fill the gap. Under the plan, eligible workers will get an extra $600 per week on top of their state benefit.” Check your state government’s website for official details and direction on how to apply for unemployment benefits. The extra $600 weekly payment from the Federal government will be in effect until the end of July.
In addition to unemployment benefits, the legislation includes cash payments, estimating $300 billion, to be paid to individuals based on adjusted gross income. Those with an adjusted gross income of $75,000 or less will get the maximum amount ($1,200), married couples with no children earning $150,000 or less will receive a total of $2,400. For individuals with an adjust gross income in excess of $75,000, they can be eligible for a partial payments (up to $99,000 for an individual tax payer or $198,000 for married couples). Anyone claimed as a dependent is not eligible.
Student Loan Payment Suspension
If you’re paying off your student loans (as approximately 20 million Americans are) and your loans are with the federal government, all automatic payments have been suspended until the end of September without penalty.
Additional Resources for Freelancers
We’re hopeful that the expansion of coverage for gig workers is part of a lasting trend. For more detail on what’s in the CARES Act and next steps you can take now, we recommend the following resources: