Can You Collect Unemployment If You Are Self Employed?

Can Self-Employed Individuals Collect Unemployment? The Answer May Surprise You

( – Many people are moving into self-employment. While this can be a good path for many, it comes with unknown factors. Workers who want to switch to being their own boss should consider the perks and setbacks that they will be facing. Especially if you plan to work in a field that provides unpredictable employment, you ensure you understand what benefits you receive, including unemployment.


A self-employed person does not work for a single employer for consistent pay but instead earns their income by contracting with businesses or other workplaces. Self-employed individuals may run their business as a sole proprietor or work as freelancers or independent contractors. These people may work for one company or for multiple companies and can have various sources of income. There are many differences between self-employment paychecks and traditional paychecks. The biggest thing to remember is that you must plan for taxes differently than those who are traditionally employed, as they do not remove taxes from your check.

Unemployment Insurance

Unemployment insurance (UI), created in 1935, is a system where employees make paid contributions on behalf of their employees so that they can have a form of income to fall back on if they lose their job for any reason as long as they did not break company policies. The U.S. Department of Labor oversees this program, but states run the basic unemployment program at the state level. In general, the basic program provides 26 weeks of benefits and replaces half of the worker’s former wages. Since the cost of living varies by location, states will usually set their own benefits and eligibility criteria.

Can Self-Employed Individuals Collect Unemployment?

One of the benefits of being employed is that the employers pay into unemployment insurance. Self-employed individuals do not usually contribute to their state’s employment fund. Generally, these people do not qualify for unemployment insurance.

State and federal laws help determine if an individual is an employee. Some self-employed workers may qualify as employees under special circumstances, so check with your state’s unemployment department to see if you qualify. They can help individuals learn about unemployment law and whether they are eligible for unemployment assistance.

Alternatives to Traditional Unemployment

While a self-employed person may not traditionally meet unemployment requirements, there are some instances where they can receive assistance to supplement their income while searching for work.

Self-Employment Assistance

Some states participate in Self-Employment Assistance (SEA) programs which help unemployed workers state their own businesses. States with these programs will pay a weekly allowance instead of traditional unemployment. Self-employed individuals can use this assistance to take the time to establish their business. This program is voluntary, and not every state participates, but those living in states that do can use it to get started working for themselves.

Disaster Employment Assistance

Disaster Unemployment Assistance is available to eligible individuals living in declared disaster areas who have been rendered unemployed. Workers needing help can utilize this program if they do not qualify for regular unemployment. Qualifications include no longer having a job, unable to reach your place of work, or cannot work due to disaster-related injuries or damage to their workplace.

When you are considering whether or not to choose to become self-employed, you should first consider all of the cons and pros of working for yourself. Most people don’t go into business for themselves expecting to fail, but sometimes circumstances beyond their control, it can happen. Self-employed individuals need to understand that they may not qualify for traditional unemployment assistance. Understanding their options and keeping up to date with important unemployment laws can help them get through a lack of income with the worst happens.

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