US Federal Stimulus – Impact on Freelancers / Contractors and Self Employed

US Government Stimulus Unemployment and Paid Sick Leave for freelancers / self-employed – contract workers / independent contractors


Known as the CARES Act, the federal government approved a $2 trillion federal stimulus package, that is said to be an economic lifeline for gig workers and freelancers.  The law, which specifically includes self employed workers, aims to provide a type of social safety net.  For the first time, freelancers / self-employed workers are being offered unemployment insurance, in accordance with the House bill. Under the new law, freelancers can receive an additional $600 per week in unemployment insurance, bringing the weekly payouts to around $800-$900 per week, after state benefits are added.  The relief is set to continue for up to four months.

“It’s an amazing win, given that there is no unemployment insurance for freelancers,” says Rafael Espinal, who recently took the helm of the Freelancers Union as executive director. “This will help inject cash flow into their homes.”


Providing financial support to freelancers and self-employed is a first in the United States.  Previously the non-employee workforce has not been entitled to any unemployment or sick leave.  Historically workers can claim unemployment insurance having contributed funds while they were working. The subject of contractor benefits has been gaining more attention in the last few years, with more portable benefits being made available to this growing sector of the U.S. workforce and global workforces.

“Unemployment benefits for independent contractor, gig economy and freelancers has never been introduced in any format especially from governments. This could set the stage for further convergence of employed and self-employed benefits on a wider scale.” John Smith, Managing Director, CXC Global Americas


The stimulus package also offers the self-employed and small business owners a $10,000 advance on an Emergency Economic Injury Disaster Loan (EIDL) that does not have to be paid back, even if the borrower does not qualify for an SBA loan. The program provides loans up to $200,000.

“While freelancers do not pay into unemployment, this is allowing this newer generation of workforce the ability to make it through this situation as all. Will this decision affect the way that freelancers are viewed towards more of an employee status – or will this be a temporary relief? Interested in thoughts on whether this could be the early steps towards some additional attention to freelancers in a similar manner to full time employees.” Konner Scherry, Global Solutions Manager

Sole proprietors, ESOPs, cooperatives, businesses with no more than 500 employees and tribal small business concerns can apply. Under the EIDL program, administered by the U.S. Small Business Administration, applicants will not have to submit a tax return and will be evaluated based on their credit score. The SBA will provide the funding within three days of a successfully completed application as an advance payment.

There is no personal guarantee required for the loans. The SBA is waiving the requirement that businesses have one year of operations prior to the disaster, but businesses are not eligible if they were not in operation on January 1, 2020. The bill authorizes $10 billion in appropriations for these loans.

“Considering the fact that the freelancers have NOT paid into unemployment, how will this development move the needle getting freelancers closer to employee status? As states and the federal government start to move freelancers towards employee status, could this be the first steps in that process?” Jack Stone, Global Solutions Manager.”

In addition, The Freelancers Union just introduced the Freelancers Relief Fund,  which offers a $1,000 emergency grant to freelancers for necessities like rent and groceries that need to be covered before aid is delivered.

The new federal deadline for tax filing and the first quarterly payment of the year is now July 15. State tax deadlines are up to their discretion, so make sure to double-check before you assume you’re off the hook on April 15.

If you are a business looking to take on more contingent workers, CXC can help.  Contact us directly to find out more.



View the full Coronavirus Aid, Relief and Economic Security (CARES) Act