The following article was originally published May 1, 2020, and republished through a collaboration with KPCC and LAist.
Story by David Wagner
Earlier this week, California launched a new unemployment program for self-employed people who've lost income due to the coronavirus. That came as good news to many Los Angeles freelancers who've been hurting during the pandemic.
But some self-employed workers are now finding that they're shut out of the state's new Pandemic Unemployment Assistance (PUA) program.
That's because even a small amount of income from traditional employment can make them ineligible. Instead, their benefits will be calculated in a way that disregards most of their income.
"I felt lied to," said Elizabeth Windust, a freelance makeup artist living in L.A. "It makes me feel invalidated as a freelancer."
Windust earns the vast majority of her income as a 1099 independent contractor. Based on that income alone, she would have likely qualified for the maximum of $450 per week in benefits, plus the extra $600 per week now going to all unemployment recipients through the end of July.
However, because a handful of her makeup jobs paid her as a W2 employee, she is now ineligible for the new program to help self-employed workers. Her benefits are instead calculated using only her W2 income.
"That's a tiny fraction of my total income," she said. Her weekly unemployment insurance award came out to $177 per week, rather than $450.
'I DON'T THINK ANYONE INTENDED FOR THEM TO BE PUNISHED'
Under federal legislation, if a worker has any earnings making them eligible for traditional unemployment insurance, they will not qualify for the new PUA program. Their benefits will be based solely on their W2 wages, even if most of their income is from self-employment.
Workers in this bind say they now feel like they're being punished for having multiple jobs.
"I don't think anyone intended for them to be punished, but I do think that workers who are partially self-employed and partially working are getting a raw deal," said George Warner, an employment attorney with the San Francisco-based nonprofit Legal Aid at Work.
Warner argues this is just one example that shows why the unemployment system needs to be simplified.
All unemployment recipients are now getting an extra $600 per week, regardless of how they were paid in the past. But when it comes to the weekly benefits that are determined based on a person's past earnings, the losses can be large for those with mixed incomes.
'I THOUGHT...I'M GOING TO BE OK'
Steven Wilkin, a freelance musician and rideshare driver in Boyle Heights, is likely losing out on about $1,500 per month.
Wilkin said when he first started losing work due to the coronavirus, he was relieved to learn about the new help coming for freelancers: "When they announced they were going to cover gig workers, self-employed individuals and independent contractors, I thought, 'Thank God. I'm going to be OK.'"
Wilkin estimates that more than 95% of his income is from self-employment. He said those earnings should have qualified him for California's weekly maximum benefit of $450.
But last year, he appeared in one commercial. For two days of work, he got a $2,000 paycheck ... and a W2. Based solely on those wages, he's now receiving just $77 per week in unemployment insurance.
"That's not really helpful for me right now," Wilkin said. "I'm just trying to keep my head above water and make sure that I'm keeping up with all of my bills."
Wilkin thinks the system isn't fair to workers with a mix of incomes.
"We work just as hard as every other American. We put in our time. We put in our effort," he said. "So why is my income not being made eligible for this program?"
THERE'S STILL THAT EXTRA $600
A number of workers with similar frustrations are now trying to advocate for changes in how their benefits are calculated.
In an LAist live digital event last week, California Employment Development Department (EDD) spokeswoman Loree Levy addressed the situation facing these workers.
She said under federal guidelines, EDD is required to calculate benefits by first considering any wages a worker earned from employment over the past 18 months. The PUA program can only be used as a last resort for workers who don't qualify for traditional unemployment insurance.
"Even if it is a small regular unemployment insurance benefit, remember that between the end of March and the end of July, EDD is now automatically adding an additional $600 in federal stimulus benefits to each week of regular UI benefits," Levy said.
"So that does help get a little bit more money into that weekly benefit amount."