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What will happen to my unemployment benefits if I work as an independent contractor?

Due to the nationwide economic collapse caused by the coronavirus, many people throughout the US are currently receiving more money through unemployment benefits than they were from their jobs. According to Business Insider, around 50% of workers in the US can currently earn more money by collecting unemployment benefits than working their regular jobs.

Because of this, many skilled people are unsure about accepting independent contractor assignments through platforms like Cloud Dentistry because they’re worried their much-needed benefits will be stopped. Thankfully, this isn’t true.

You can currently work as an independent contractor and continue to receive your unemployment benefits. 

In an interview with Forbes, Boston-based attorney Amanda Thibodeau confirmed that you can legally earn money while collecting unemployment benefits, providing you “...disclose all income you receive, which will be calculated against your benefits amount for that week.”

Andrew Stettner, who studies unemployment insurance policies as a senior fellow at the Century Foundation, further clarified the issue to Money by explaining that as long as you’re earning less from your part-time work than you receive for your regular unemployment, you’ll continue to earn unemployment benefits.

Different states, different rules

The regulations regarding how much you can earn before your unemployment benefits are affected vary by state. Because of this, it’s important you research your own state’s rules before accepting any independent contracting position. 

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Generally, workers are permitted to earn up to a certain percentage of their weekly unemployment benefit or a fixed sum while still receiving full benefits. As soon as you earn over the given percentage or fixed sum, your benefits will be reduced. If you earn the same as or more than your unemployment benefits, you won’t be entitled to any additional money.

Timing matters

The time frame during which you’re required to report payment also changes by state. This small matter can greatly affect how much unemployment benefit you’re entitled to.

When working as an independent contractor, most states require you to report the money only after you’ve received it. But at this time, some states (including Texas and Colorado) are requiring you to report your earnings when you’ve requested them. Whether you’ve actually received any money or not is irrelevant. 

Unemployment benefit is calculated on a weekly basis. So this could mean the money you receive from your benefits is reduced because you’ve sent a client an invoice, even though they haven’t paid it yet.

However, you’ll never end up out of pocket — it will all balance out. When your client pays the invoice, your unemployment benefit won’t be reduced because you will have already declared the payment.

Eligibility for unemployment benefits

Each state has a different set of requirements you must meet in order to be eligible for unemployment benefit. But in addition to the variants, there are some conditions you must meet which are the same nationwide.

To qualify for unemployment benefits, you must be able to prove you’re actively looking for a full-time job and you’re available to work if a suitable position becomes available to you.

If you land an independent contractor assignment which requires you to work 8 hours per day, Monday-Friday at a set location, you won’t be able to claim unemployment benefits because you won’t be available to take on a full-time job.

However, if you’re able to carry out your independent contractor duties while still being able to prove you’re looking for work and can accept a full-time position if you find one, it’s likely you can still collect your unemployment benefits.

According to Stettner, additional criteria you must meet to claim unemployment include not becoming involuntarily out of work. If you sign up for a short-term position as an independent contractor and end your contract early, you could be classed as being voluntarily out of work and might not be eligible for unemployment benefits. 

So if you take on a temporary position to boost your income, it’s important you’re committed to seeing out the contract to the end to qualify for unemployment benefits. With Cloud Dentistry, you can chat directly to potential clients and ask them as many questions as you like before accepting a position. This small perk makes it easy to decide if you’re a good fit for each other before moving onto the next stage.

Looking for work as an independent contractor

The job market has come a long way since unemployment benefits were initially launched. Not that long ago, to prove you were actively looking for work meant you had to provide a list of job advertisements you’d responded to or businesses you’d contacted with your resume. 

With digital marketing and social media having such a big impact on today’s job market, how we define “looking for work” has drastically changed.

In the same interview with Forbes, Bruce Brumberg, JD asked whether social media promotions, “such as Instagram posts of new graphic designs or samples of photography” counted as proof of looking for work.

Amanda Thibodeau responded with: “These may qualify. Each state’s program lays out what types of work search activities must be reported each week, such as responding to job postings or sending out résumés. Given the unique situations gig workers and freelancers are involved in, it is likely the states will continue to be flexible on their work search requirements.”

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What will happen to your unemployment benefits if you work as an independent contractor?

It’s clear that there isn’t a one-rule-fits-all when it comes to working as an independent contractor while still collecting unemployment benefits. Eligibility requirements and how much money you’re entitled to vary by state.

To clear things up and help you see where you stand, here’s an overview of how your unemployment benefits will be affected if you work as an independent contractor in several different states.  

Unemployment benefits as an independent contractor in Texas

In Texas, you can receive unemployment benefits as long as you meet other requirements, including continuing to look for full-time work. 

While working as an independent contractor, you can earn up to 25% of your weekly benefit amount without your benefits being reduced. If you earn more than 25% in a week, the unemployment benefit money you receive for that week will be reduced by how much you earn over the 25%. If you earn more than your weekly benefit amount, you won’t receive any unemployment benefits at all.

For example, if you receive $500 per week in unemployment benefits, you can earn up to $125 per week working as an independent contractor with Cloud Dentistry before your benefits will be affected.

In the same scenario, if you were entitled to $500 per week in unemployment benefits, but received $150 per week working as an independent contractor, your weekly unemployment benefits would be reduced to $475. If you earned more than $500 per week as a freelancer, you wouldn’t be entitled to any unemployment benefits.

Unemployment benefits as an independent contractor in Colorado

The rules in Colorado are similar to those in Texas. You can earn up to 25% of your weekly benefit amount and still receive full unemployment benefits, providing you work fewer than 32 hours per week and continue to look for a full-time job.

For every additional $1 you earn over the 25%, $1 will be deducted from your full benefit payment. If you earn the same as or more than your weekly benefit amount on independent contractor assignments, you won’t be able to claim any unemployment benefits.

Unemployment benefits as an independent contractor in Illinois

Illinois is particularly generous when it comes to earning money as an independent contractor while still claiming unemployment benefits.

As a part-time worker, you can earn up to 50% of your weekly benefit amount and still receive full unemployment benefits, providing you work fewer than 40 hours per week, earn no more than $667 per week and continue to look for a full-time position. For every $1 you earn over the 50%, your benefits will be reduced by $1. If you earn the same as your unemployment benefits per week, you will no longer receive any UE money.

In this example, if you’re eligible for $500 in unemployment benefits per week, you can still earn $250 each week without it affecting your unemployment benefits. If you earn $260 per week, your benefits will be reduced to $490. But if you earn $500 per week, your UE benefits will be terminated.

Unemployment benefits as an independent contractor in Georgia

Georgia does things a little differently. When working part-time, as long as the money you earn doesn’t exceed your weekly benefit amount, you can still claim at least part of it.

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Instead of focusing on a percentage of your benefits, Georgia works with a fixed rate. If you earn over $300 per week, your weekly unemployment benefit payments will be reduced. 

For example, if you’re currently receiving $500 in weekly unemployment benefits, you can earn an additional $300 per week and still receive the full $500. But if you earn $350 per week, you will only receive $450 in weekly unemployment benefits.

Independent contractors and work benefits

When calculating how much unemployment benefit you’re entitled to, the government takes into consideration the benefits you usually receive as a regular employee, such as vacation pay, sick pay, etc. When you’re working part-time as a regular employee, the monetary value of these benefits will be added onto the paycheck you receive and counted against your benefits. 

However, independent contractors aren’t entitled to employee benefits such as vacation and sick pay. This means they’re not counted against your benefits. So if you earn an additional $300 per week, a straight $300 will be counted against your benefits.

Whereas a regular employee could earn $300 + $25 in sick pay + $25 in vacation pay and have $350 counted against their benefits. This is just another advantage of working as an independent contractor.

Reasons employers hire independent contractors

If you’ve never worked as an independent contractor before, you might be curious as to why any employer would choose to hire a freelancer over a full-time employee. The truth is there are many benefits for both the employee and the independent contractor to working this way. Here are just a few reasons employees choose to hire independent contractors:

  • To temporarily fill a gap when work volume increases. After being closed for several weeks, dental practices will likely see a surge of patients wanting appointments as soon as possible.
  • As a replacement for a full-time employee who is temporarily unavailable for work. A dental practice whose dental hygienist is on maternity leave will likely hire an independent contract dental hygienist to fill her place.
  • For a short-term assignment that requires specialist knowledge. Hiring a full-time specialist dentist is expensive. Hiring an independent contractor dentist exclusively for the hours required to carry out the procedure is a much more affordable option.
  • As a cost-effective solution when hiring a full-time employee isn’t possible. When new dental practices first start out, budgets are tight. It’s much more affordable to pay a dental hygienist to work for a couple of hours each day than to pay a full-time employee.
  • For a try-before-you-buy experience. Working with an independent contractor dental assistant or dental hygienist is a great way for practices to discover if someone is a good fit before they hire them permanently.

Before you accept a position as an independent contractor in a dental practice, it’s always wise to know why the employer is hiring a temporary worker and not a full-time employee. This way, you’ll have a better understanding of how long your assignment is likely to last and the probability that your position will become permanent.

Reasons to work while claiming unemployment benefits

While it might be tempting to enjoy your time at home and live on your unemployment benefit alone, you still have bills to pay and a life to live. Here are some reasons that should motivate and persuade you to get back to work.

Employers view contract work positively

Working as an independent contractor and accepting part-time jobs at a time like this proves you’re a hard-working, proactive and motivated person.

While many people (possibly some you’ll be competing with for future jobs) will have a gap on their resume covering these months, you can stand out from the crowd by listing a series of independent contractor assignments on your resume and LinkedIn profile.

Keep your skills fresh

When you practice your skills on a regular basis, you reinforce all the good habits you got into that make you a great dental professional. But when you don’t practice these skills for a long period of time, it’s easy to forget important steps you learned throughout your career that really made a difference to the quality of your work.

Consider a dental hygienist who has binge watched Netflix for the past month. Now consider a dental hygienist who has worked 40 hours on freelance assignments over the past month. It’s easy to predict who is going to have the better skills and who will easily slip back into their regular pattern of work when everything goes back to normal.

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Wearing surgical masks when you’re not in the dental office, practicing social distancing and being forced to cancel your exotic summer vacation all take a toll. Not to mention having to cut down on your spending.

Read: "I'm a dental hygienist. Can I be an independent contractor?" >>

While unemployment benefits are definitely better than nothing, they’re just a fraction of what you were previously earning and it’s likely you’ve had to dip into your savings at least a little bit.

If you accepted a couple of independent contractor assignments, you wouldn’t have to worry about paying the bills. Not only that, but you’d be able to treat yourself to your favourite take-out, a new outfit or something else that will brighten up your day during these turbulent times. We could all do with a treat right now and if you work just a few hours a week, you’ll be able to afford one. 

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Get back to some kind of normality

When you were temporarily laid off, it’s likely you totally lost your normal routine. Instead of having to get up at 7am, get ready and be at the dental practice for 8.30am, you suddenly found yourself without any responsibilities.

This is fun and novel for the first few days. But it gets old fast. By now, there’s a good chance you wish you could have your old routine back. If you start working as a freelance dental worker, you can.

Even if it’s just a couple of days per week, getting up early, putting your work clothes on and heading out the door with a purpose will bring back some sense or normality and make you feel like you’re accomplishing something. It will help you appreciate your days off more, too.

Working as an independent contractor is easy with Cloud Dentistry

When you sign up as an independent contractor with Cloud Dentistry, you don’t have to waste hours each day searching for jobs on Craigslist or scrolling through sketchy positions on dental job boards. The modern, digital platform provides you with everything you need to find temporary dental work at reputable dental practices.

You’re in total control. You decide which offers you accept, what your hourly rate is, the work schedule you’re happy to commit to and the practices you want to work in. If you think you’ve found a good match, you can use our in-app peer-to-peer messaging service to ask all the questions you want before accepting the job.

Sign up for Cloud Dentistry today and earn an additional income to boost your unemployment benefits and help keep your skills sharp during these uncertain times.

*The contents of this article are for informational purposes only. It is not a substitute for legal advice. Always consult a specialist before making any decisions.