Can Self-Employed Workers Collect Unemployment?

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Self-employment offers many advantages, including the potential for developing multiple income streams. However, even the most successful freelancers can find themselves out of work, especially during an economic crisis. If you’re in this position, you might be wondering if you can collect unemployment

Traditionally, self-employed workers, independent contractors, and freelancers who lose their income are not eligible for unemployment benefits. However, there are exceptions.

Key Takeaways

  • Unemployment insurance programs are funded by employer contributions to cover qualifying employees who lose their jobs through no fault of their own. 
  • Most self-employed workers do not pay into their state’s unemployment fund and therefore do not qualify for benefits.
  • Some independent contractors may be employees under state law and thus qualify for unemployment coverage.
  • Self-employed workers may also qualify for financial assistance if they become unemployed due to a presidentially declared disaster.

Unemployment Benefits for Self-Employed Workers

Because employers contribute to a fund for unemployment benefits, their employees are eligible to receive benefits from the government if they qualify after losing their job. If you are operating as self-employed, you most likely didn't pay into your state's unemployment fund.

Other than in special circumstances, if you were paid as an independent contractor and received a 1099 form, you were not considered an employee and would not be eligible for unemployment benefits. That's because eligibility for state unemployment benefits is based upon being employed by an organization that was paying into the unemployment insurance fund.

When You Are Considered an Employee

If you were hired as an independent contractor, you may still be considered an employee, and be eligible for unemployment benefits, depending on the law in your state. For example, in New York, even if your employer hired you to work as an independent contractor, the law may still consider you an employee. This means you may qualify to receive unemployment insurance benefits.

Federal and state law determine whether an individual is an employee or an independent contractor.

How To Check Your Eligibility

Eligibility varies by state, so check with your state unemployment office to find out who is eligible to collect unemployment compensation, and how to go about filing a claim.

When you become unemployed, it’s a good idea to check if you may be eligible for benefits right away. It can take time to begin receiving benefits if you do qualify, so you should file your claim as soon as possible.


If you’re eligible, you’ll be able to file for unemployment benefits online. Use the CareerOneStop Unemployment Benefits Finder to learn about eligibility and applying for benefits in your state.

Disaster Unemployment Assistance

If you were unemployed as a result of a major disaster, you may be eligible to receive disaster unemployment assistance. The federally funded Disaster Unemployment Assistance program (DUA) is designed to provide assistance to workers who become unemployed as the result of a presidentially declared major disaster, and who are ineligible for other unemployment benefits.


State unemployment law may provide eligibility for benefits in some other special circumstances, and your unemployment department can help you navigate the process should you become unemployed.

Self-Employment Assistance Program

The Self-Employment Assistance Program is a federal government-endorsed program that offers unemployed or displaced workers in some states unemployment benefits when they are starting a business.

The Self-Employment Assistance Program pays displaced workers an allowance, instead of regular unemployment insurance benefits, to help keep them afloat while they are establishing a business and becoming self-employed.

When You're Already Collecting Unemployment

If you are collecting unemployment based on a job you had, working freelance can impact the benefits you are receiving. For example, in New York state, you need to report income when you do freelance work, do "favors" for another business, start a business, are self-employed, or become self-employed while you are collecting unemployment benefits. If you are doing other work, you may be disqualified from receiving unemployment benefits or receive partial unemployment benefits for the week you worked.

There are similar requirements in other states. In addition, in order to claim benefits, you need to be ready, willing, and available for work. Some states require that you keep and regularly turn in an employment log documenting your efforts to regain employment.

If you are receiving unemployment benefits, make sure that you know the guidelines regarding any work you engage in. Violating the requirements can result in a loss of benefits and also substantial fines if you are discovered.

Frequently Asked Questions (FAQs)

What disqualifies you from unemployment?

In most states, you are disqualified from receiving unemployment benefits if you are fired for cause. You may also fail to qualify if you haven’t worked long enough or earned enough money to meet requirements. For example, some states will require you to have worked at least two quarters in a calendar year and exceed a wage threshold.

How long do you have to work to get unemployment?

Most states have time-worked requirements for unemployment benefits. For example, in New York state, you must work two quarters in a calendar year to qualify. Note that you can work for multiple employers during that time, as long as they are covered by the state unemployment insurance program.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Department of Labor. "State Unemployment Insurance Benefits." 

  2. New York State Department of Labor. "UI and Independent Contractors Frequently Asked Questions." 

  3. IRS. "Independent Contractor (Self-Employed) or Employee?" 

  4. U.S. Department of Labor. "Disaster Unemployment Assistance." 

  5. U.S. Department of Labor. "Self-Employment Assistance." 

  6. New York State Department of Labor. "Before You Apply for Unemployment: Frequently Asked Questions."

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