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For Jobless Gig Workers, Stimulus Bill Benefits No Silver Bullet

March 31, 2020, 10:01 AM

The prospect of the $2 trillion stimulus bill providing gig economy workers, freelancers, and contractors with urgent financial assistance may run into the reality of burdensome filing requirements and the mazes of overwhelmed bureaucracies.

Lawmakers modeled the stimulus bill’s measure to compensate workers who don’t qualify for traditional unemployment insurance, called the Pandemic Unemployment Assistance program, on an existing program for disaster relief. But the Disaster Unemployment Assistance program has never been used on anything close to the scale of the current jobless wave, as millions of people flood state unemployment insurance programs with initial claims.

“We’ve done a lot with DUA after major hurricanes and fires. Those were big. This is completely different,” said Maurice Emsellem, a program director with the National Employment Law Project.

Changing state disaster assistance programs to fit the pandemic assistance program’s requirements and features is going to be “a beast,” said one state labor department official.

The federal government still needs to clarify eligibility standards and explain how workers can prove they’re entitled to benefits, the official said. Many states are operating on outdated, decades-old systems that will be difficult to update to track those new standards, he said.

“The folks in D.C. can’t just say ‘Alright, we did it, here’s your money’ and walk away,” the official said. “It’s not that easy.”

‘The Best System We Have’

The stimulus measure directs an estimated $26 billion to boost unemployment insurance programs, including the program for contract workers designed on the Disaster Unemployment Assistance program.

“This is the best system we have to use right now,” said Michael Zona, a Senate Finance Committee spokesman.

Because the states are responsible for program administration in unemployment insurance, there’s no single set of practices or systems. Hopefully those states that have already built disaster unemployment benefits into their UI systems can act quickly, Zona said.

Modeling it on the disaster program also lets the Labor Department use its existing guidance, which will could also speed things up, he said.

How the Labor Department interprets and gives guidance for the pandemic assistance program will carry “huge consequences,” said Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality.

The legislation creating that new program is “the most complicated unemployment insurance law I’ve ever seen,” he said. Dutta-Gupta worked on several rounds of UI extensions during the post-2008 economic downturn as a staffer on the House Ways and Means Committee.

The Labor Department didn’t respond to requests for comment.

‘Get the Benefits out Quickly’

Like the disaster assistance program, the pandemic program becomes available for workers who tried and failed to get traditional unemployment insurance benefits.

Based on how the law’s written, the pandemic assistance program should allow workers to file a single claim with their state UI system rather than go through multiple steps, said Stephen Woodbury, an economics professor at Michigan State University who’s written extensively on unemployment insurance.

“The idea is clearly to get the benefits out quickly,” Woodbury said.

Under California’s disaster assistance program, people file a single claim with the unemployment insurance system that immediately identifies them as losing their work because of the disaster, said Emsellem, the program director at the National Employment Law Project.

But California also has burdensome paperwork requirements for disaster unemployment benefits that slows the process and can make some filers abandon their claims, Emsellem said. Workers must submit tax forms, which can be an obstacle for low-wage workers who don’t earn enough to requiring filing taxes, and the state’s system doesn’t accept those documents via email, he said.

Trying to process pandemic-related claims using its system for disaster claims would be a “mess” and “just not realistic,” Emsellem said.

Moreover, only a handful of states—such as California, Texas, Florida, New York, New Jersey, and the Carolinas—have ever used the Disaster Unemployment Assistance program, he said. When North Carolina made DUA available after Hurricane Florence in 2018, individuals first had to file for unemployment, and be denied or exhaust their eligibility, before they could even file for DUA.

State efforts to get pandemic assistance programs off the ground will be complicated further by the unprecedented volume of unemployment claims, said Rachael Kohl, a University of Michigan law professor who leads the school’s Workers’ Rights Clinic, which primarily represents UI filers.

Michigan, for example, is dealing with more than 60,000 calls a day and processing more than 100,000 new UI claims per week, even as it continues reviewing existing claims, adjudicating appeals, paying out benefits—and now expanding its system to accommodate the new pandemic assistance program, Kohl said.

Fighting UI Denial

Gig-economy workers can obtain traditional unemployment insurance if they’re deemed to be misclassified as independent contractors. On Thursday, New York’s highest court ruled that a Postmates worker was an employee eligible for UI benefits.

But that’s often a fight.

Uber Technologies Inc. and Lyft Inc., for example, don’t issue W-2 payroll information on drivers because they consider them independent contractors. If the state’s only record of someone’s compensation is from a 1099 form, used for contractors, it’s considered proof the company hadn’t paid into the unemployment insurance fund—and frequently that the worker isn’t eligible for unemployment insurance benefits.

Winning such cases can require the type of legal aid that’s likely to be in short supply during the Covid-19 crisis. And a worker’s eligibility for unemployment insurance is intertwined with his or her ability to get benefits from the pandemic assistance program. Workers can only get access to the new pandemic program if they aren’t eligible for traditional UI, meaning they must accept a state’s UI denial to have a chance at emergency unemployment assistance.

Furthermore, the eligibility requirements in the pandemic assistance program may pose obstacles for workers classified as independent contractors. For example, the legislative language leaves it unclear whether those workers who’ve decided to self-quarantine to avoid coronavirus infections would qualify for benefits, said Sachin Pandya, an employment law professor at the University of Connecticut.

The Labor Department could provide more certainty since the it has discretion to broaden eligibility requirements, Pandya said.

Guidance from the federal government could also also help states set up systems to process pandemic-related claims that improve on how they’ve handled the Disaster Unemployment Assistance program, Emsellem said.

“The Labor Department has the authority to deviate from DUA,” he said. “That’s crystal clear—this is a different program. We don’t want to repeat and compound the mistakes of DUA on a program that’s going to impact a massive number of people.”

—Chris Opfer and Jaclyn Diaz contributed to this report.

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editor responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com

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