While negotiations over the 4th coronavirus relief package have stalled, the gig workers are hurting the most, as many have since been living their lives in a limbo. Although Trump signed an executive order for extending the direct payment unemployment check, the order reduced the financial aid down to $400, out of which only $300 will be delivered as direct assistance to American citizens. The $100 dollar difference will go to state coffers as supplementary funding for their respective Corona Relief Fund.

Moreover, Trump’s executive orders (EOs) only caused the talks to drag longer. making the Republicans less enthusiastic since the EOs give the appearance that some legal assistance is already in place. Notwithstanding that Trump’s executive mandates are unconstitutional because in effect, he is bypassing the required congressional approval.

Besides, there are other unaddressed issues that need resolutions, particularly the plight of gig workers and their eligibility, or rather ineligibility, to receive state unemployment benefits.

Although the CARES Act’s Pandemic Emergency Unemployment Compensation (PEUC) aimed to include the self-employed, the freelance and gig workers as recipients of state unemployment benefits up to December 2020. As it is, many of these groups of workers have been disqualified due to their lack of capabilities to meet state requirements.

In most states, applicants for unemployment insurance benefits must have earned enough wages during a specific base period of employment. Clearly, how gig workers and the like, can qualify for state unemployment benefits is an issue that lawmakers need to tackle in extending the PEUC.


What Exactly are State Unemployment Benefits and How are They Funded?

Unemployment benefits are actually the financial assistance that employed citizens of a particular state can claim, when they become involuntarily unemployed. However, persons who become unemployed must not have caused the reason/s for the loss of work. Moreover, they must meet certain eligibility requirements stipulated under the laws of the state granting administrating the unemployment insurance program.

Unemployment benefits are derived from the unemployment insurance trust fund that is financed through payroll taxes paid by employers as Federal Unemployment Tax Act (FUTA) This payroll tax, is due on the first $7,000 of a workers’ earnings to be remitted as insurance coverage for state workers in case of involuntary unemployment.

In the event the state unemployment insurance funds are not enough, state governments can draw from the state reserves; and if still not enough, a state government can borrow from the federal fund. Currently, several state governments still have outstanding federal loans used in funding the unemployment benefits of laid off workers.

Self-employed, freelance and gig workers do not have the protection of the unemployment insurance fund but were given special privilege under the PEUC. Still, their occupation has placed them in a situation where they are unable to meet some state eligibility requirements.