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Edgebrook, Edison Park, Sauganash

Despite Stimulus Bill Promising Unemployment Benefits, Independent Contractors Wait For Answers As Savings Vanish

Gig workers qualify for unemployment under the new stimulus bill — but 1099 workers are being asked to wait indefinitely as a new system is set up to serve them.

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EDGEWATER — Because of the coronavirus crisis, independent contractor Robyn Reise’s hours have been cut from 35 to 6 and if she does not receive unemployment benefits soon, she and her husband won’t be able to cover their monthly bills.

It’s a situation many independent contractors in Illinois find themselves in at the moment, and although Congress passed a $2 trillion stimulus March 27 that will expand unemployment benefits to independent contractors or “gig workers,” the current system is not set up for anyone who files taxes on a 1099 form.

“The problem in Illinois is that the legislation was just signed over the weekend and people are just trying to understand what it will provide for,” Susan Hurley, executive director of Chicago Jobs For Justice, said last week. “Additionally, there is no system or process in place for verifying the income or earnings of independent contractors which is a necessary component to figuring out how much unemployment they should receive.”

That’s because the current state system is currently overwhelmed — more than 178,000 Illinois residents applied for unemployment insurance last week, the highest ever for Illinois, according to data that’s been tracked since 1980.

On Thursday, Governor J.B. Pritzker said the state’s system is currently getting an “onslaught” of claims and acknowledged delays in filing for unemployment benefits, adding, “we are trying very hard.” However, he did not address questions about independent contractors.

The governor’s office and the Illinois Department of Employment Security did not respond to multiple requests for comment.

The state’s unemployment website links to a federal stimulus FAQ, which says a system is being created for such workers, and applicants should not call about this or apply at this time.

“Further details about the new federal programs and how to apply
will be made available once they have been finalized,” the document says. “IDES will provide information about how to apply for this benefit as soon as it is finalized. Please do not apply at this time.”

But for Reise, who works at a pediatric therapy clinic and lives in an Edgewater apartment with her husband and 10-year-old son, their financial stress is a bigger worry than the fear of catching coronavirus. 

“What I’m making right now with what my husband makes is not enough to cover our basics,” Reise said. “Unless something changes at my job or unemployment kicks in, we’re going to be stuck.”

She added that while they made their bills for this month, next month is uncertain and she is hesitant to ask their landlord for a break.

“We haven’t asked our landlord. A family owns our unit so I don’t want to ask them because they are dependent on our rent to support their family, but we might have to, I don’t know,” Reise said.

Reise said she was able to file for unemployment benefits online after several tries but does not know what, if any money she will receive. She said estimate she received from the state’s online system was a fraction of what she makes now and was based on a part-time job she had two years ago — one in which she was a traditional employee who filed taxes on a W-2 form. Additionally, she was informed that she would not find out about her claim for at least another 10 days.

Hurley said the main problem for independent contractors is that the state system cannot easily verify earnings, and thus, how much benefit they should qualify for.

“In this situation it’s thorny because independent contractors don’t have a W-2 so they have to figure out other ways to verify their income,” Hurley said. “The state is trying to, as quickly as they can, try to figure out the most efficient and accurate way to establish what one’s income was to establish their unemployment benefit, but they haven’t rolled any of that out and they are already being crushed by the volume of traditional employee claims.”

Although Chicago Jobs For Justice advocates on behalf on independent contractors, Hurley is urging them to be patient and wait for the state to implement an updated filing system for 1099 workers.

Meanwhile, her group is pressuring large companies that depend on independent contractors to offer some financial relief to gig workers.

“We need to hold these companies accountable because without that, it basically means the taxpayers are picking up the tab for paying unemployment insurance and these employers have paid nothing into it,” Hurley said. 

Under normal circumstances, independent contractors would not qualify for unemployment insurance because they do not pay into it, according to Marlene Colombo, a tax professional in suburban Naperville. They file taxes at the end of the year, but that money goes toward social security, medicare and state and federal taxes. Unemployment insurance is funded by businesses who pay into it on behalf of their traditional, W2 employees.

However, independent contractors often pay around 30 percent of their earnings in taxes, which is more than traditional employees. Freelance food writer Leigh Kunkel, who lives in Humboldt Park, said her tax dollars fund fund things she doesn’t directly use — so she should be able to lean on this money for help during this uncertain time.

“My taxes might not have been going to this specific thing, but I’m certainly paying for other services that I don’t personally use,” Kunkel said. “I don’t have kids but my taxes go towards schools.”

For Hurley, the decision to extend unemployment benefits to independent contractors is a moral one during an unprecedented crisis.

“If we don’t, people are going to be homeless and hungry.” 

Block Club Chicago’s coronavirus coverage is free for all readers. Block Club is an independent, 501(c)(3), journalist-run newsroom.

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