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Hybrid workers - mix of W2 and 1099

Updated: Feb 10, 2021

News: It's not unknown that hybrids are getting the short end of the stick, especially when the majority of income is classified as 1099. Adam B Schiff and Judy Chu wrote to Speaker Nancy Pelosi and Leader McCarthy specifically about this issue. See letter here.

If you have done any  W2 work within the last 18 month, even if you have a much greater self- employed 1099 income, your unemployment claim will be calculated off of your W2 work. This is a source of frustration for many people who have a significant 1099 income compared to their W2 work. You might be tempted to exclude your W2 work when filing, but legally you must report your W2 income when applying for either PUA or UI. Even if you choose to exclude it, your employer reports wages to the state and they will know what you've earned.

How much do I have to earn in order to qualify for regular unemployment?

You must have earned at least:

a) $1,300 in the highest quarter of your Base Period or

b) $900 in your highest quarter and total base period earnings of 1.25 times your high quarter earnings.

Anyone who makes over 1,300 with w2 wages will qualify for regular UI despite your 1099 income. The reason is because your 1099 income does not pay into unemployment.

My income should be considered because I was in fact an employee, what do I do?

If you believe your income should not have been 1099 and as an employee rather, you can consider reclassifying your income. What this means is you can dispute your 1099 income and this will involve your employer having to reclassify you as an employee. In situations such as a filmmaker, where you are technically an employee (working under supervision, set hours, etc) and not someone like a plumber (working on their own time and getting the job done on their own clock), then you have the potential to reclassify your income as w2 wages and therefore, having those reclassified w2 wages to contribute to your benefit award and weekly benefit amount.

From the EDD website:

What if I’m out of work due to COVID-19, have a small amount of W-2 income, and a large amount of income from self-employment? Can I not declare the W-2 wages and just rely on self-employment to get PUA?

  • No, if EDD has wages reported from an employer over the last 18 months that would qualify you for a regular UI claim, then the EDD is required by law to proceed with a regular UI claim for you. 

I am already receiving regular Unemployment Insurance (UI) benefits. Can I choose to switch over to PUA benefits if I want to identify myself as an independent contractor or as self-employed?

  • No. If you are already receiving regular UI benefits, then you cannot qualify for PUA benefits.

I am primarily self-employed but have worked occasionally as an employee. What is the basis for not letting me get PUA just because I have some minimal income as an employee?

  • The federal CARES Act, which created the PUA program, requires that an individual may only receive PUA benefits if they are not eligible for regular or extended UI benefits or Pandemic Emergency Unemployment Compensation (PEUC) benefits. This includes individuals who have exhausted all rights to such benefits, self-employed individuals, independent contractors, or those who have insufficient work history.

  • Generally, if you have enough employee earnings (e.g., W-2 wages) that have been reported to EDD by an employer, you would be eligible for regular UI benefits (plus any additional or extended UI benefits, such as the $600 weekly benefit provided under the CARES Act). Because the existence of sufficient employee wages would make you eligible for regular UI, under federal law, you would not be eligible for PUA.

  • But if your earnings as an employee are minimal, you will likely not qualify for UI, which means you would then be eligible for PUA if you have a COVID-19 reason for being unemployed.

An interesting LA Times article highlighting the how the CARES act isn't uniformly assisting over 3 million self-employed Californians:

Here is a link to a petition to address this gap in benefits issue:

Another petition you may want to sign here


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Tools & Resources:

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