Unemployment Benefits

• Individuals who are out of work may qualify for unemployment benefits in their state. Most states offer an initial benefit period of up to 26 weeks for new claimants. Those who are still unable to find suitable employment after their initial period ends may qualify for extended benefits from the federal government or from their state unemployment department.
  
  

Independent Contractors

• By definition, independent contractors are not employees. They are self-employed individuals who contract to do work with a company for a certain job or time period. These workers generally receive a Form 1099 at the end of the year that reports the total amount of their earnings. Because they do not have income taxes, Social Security taxes or Medicare taxes withheld from their pay, independent contractors are responsible for reporting their gross income and paying their own taxes along with their annual income tax return. Many independent contractors perform seasonal work that ceases during slow periods or inclement weather.
  
  

Unemployment Eligibility Requirements

• To qualify for unemployment benefits, workers must be employees. Companies pay unemployment tax on the wages they pay out to their employees. States use these tax payments to help fund their unemployment compensation programs. When workers are laid off or fired for cause, they can file an unemployment claim and receive their benefits from the unemployment taxes their employers paid.
  
  

Independent Contractors and Unemployment Benefits

• Since workers must be employed in order to receive unemployment compensation, independent contractors do not qualify for these benefits. In some cases, a company may consider a worker to be an independent contractor while the worker believes he is an employee. To settle such disputes, state unemployment departments may conduct a hearing to determine the legal status of these workers. If the state finds the worker is an employee, he may qualify for unemployment benefits.