The federal CARES Act expands Unemployment Insurance benefits and covers many coronavirus-related scenarios and those traditionally left out – self-employed, sole proprietors, independent contractor, freelance, and “gig” workers due to loss of work, loss of income, loss of hours, school closure, client/customer closed and engaged in a contact of work with client/customer.
Unemployment Benefits Unemployment benefits have been increased, expanded to persons who normally would not qualify, and have been extended. Benefits will now be available to the self-employed, including independent contractors, who otherwise were ineligible to collect.
Who Benefits: Independent contractors, the self-employed, and sole proprietors who normally would not be able to collect unemployment benefits will now be temporarily eligible for these benefits to the same extent as others who would normally qualify. In addition, the benefits have been significantly enhanced.
Basis for Claim: A person would need to certify that they are no longer employed because they are ill, must take care of a child whose school or day care is closed, or are generally not able to work because of COVID-19.
Application Process: Applicants should apply for unemployment benefits through the New Jersey Department of Labor’s website in the same manner as any other applicant. Under the current process, the application may be initially denied and then a subsequent process will take place which will allow independent contractors the ability to produce evidence of their status and income. It is likely that an independent contractor may be asked for two years of tax returns, copies of 1099s, or other relevant documentation. https://myunemployment.nj.gov/
Benefit Amounts: Significantly, benefits have been increased by $600 per week and extended for up to 13 additional weeks for a total of 39 weeks. Benefits may be applied retroactively to January 27, 2020 although the increased payment is only retroactive to April 1, 2020 and will expire on July 31, 2020.
Potential Delay in Benefits: Because this is a new expansion of the program dependent on federal spending, there may be a delay from application to when the first payments are made. In addition, New Jersey also does not currently provide unemployment insurance benefits for the first week of unemployment while the federal program does under the CARES Act.
*For additional resources see the following:
Small Business Administration – https://www.sba.gov/
New Jersey Department of Labor – https://www.nj.gov/labor/
New Jersey Business & Industry Association – https://njbia.org/coronavirus/
New Jersey Business Action Center – https://faq.business.nj.gov/en/collections/2198378-%20information-for-nj-businesses-on-the-coronavirus-outbreak
PARTIAL UNEMPLOYMENT-REDUCTION IN HOURS
An employer who has at least 10 employees may apply to the division for approval to provide a Shared Work program. The purpose of such a program is to stabilize an employer’s workforce during a period of economic disruption by permitting the sharing of the work remaining after a reduction in total hours of work. Under an approved Shared Work program, workers who have their hours of work reduced may receive “short-time” unemployment benefits for the lost hours of work, while continuing to work at reduced hours with a continuation of their health insurance, pension coverage, and other benefits.
NJDOL: Unemployment Information for Corporate Officers and Business Owners — https://myunemployment.nj.gov/before/about/who/corpbusiness.shtml
What info do I input to prove my income?
If you are an independent contractor, you may be asked for two years of tax returns, copies of 1099s, or other relevant documentation.
If you are a sole proprietor, or self-employed individual, certain documents can assist in determining income such tax returns, Forms 1099-MISC, and income and expenses from the sole proprietorship but it is advised that you check with an accountant. Multiple LLC partners applying for unemployment is unclear. https://myunemployment.nj.gov/
Can someone who is Registered as an S. corporation collect unemployment?
They should be eligible under the federal program ($600/week), but not the state. To apply they must file with NJDOL, be denied coverage and hold that certificate of ineligibility to claim the federal benefits. We have no clear answer on when the federal program will begin to pay in NJ.
A worker has used all 26 weeks of unemployment insurance and is still out of work/will there be an extensions due to coronavirus?
You are likely eligible for help from NJ’s Unemployment Insurance: Under the CARES Act, these individuals are likely eligible to receive an additional 13 weeks of Unemployment benefits, and an additional $600 per week through July. However, we are awaiting federal guidance on the specifics of the 13-week extension of unemployment benefits. Please check back to the NJ DOL frequently for updates.