Jamie Biesiada
Independent contractors (ICs) for the first time have the opportunity to apply for unemployment benefits thanks to the $2 trillion Coronavirus Relief and Economic Security (Cares) Act signed into law last month.
ICs can apply for unemployment through their state of residence's unemployment agency.
Peter Lobasso, ASTA general counsel, talked about the new benefit during a webinar on March 30.
ICs are usually not able to claim unemployment benefits, Lobasso said. Unemployment benefits are funded through both employer and employee contributions. W-2 employees contribute through a payroll tax deduction, and the employer contributes based on their total payroll, which includes only W-2s. Therefore, neither ICs (who receive all their compensation with no payroll deductions) nor businesses that engage ICs are paying into the system.
"But the Cares Act recognizes that there are a lot of self-employed people whose incomes have been decimated by the crisis," Lobasso said. "As such, it contains relief for them."
Unemployment benefits under the Cares Act will be extended for up to 39 weeks.
To qualify for unemployment, ICs should apply under their state's unemployment agency. ASTA is in the process of creating a resource for members listing instructions on a state level.
"The IC needs only to certify that he or she has been adversely impacted by Covid-19, but for that would be able and available to work as usual," Lobasso said, adding that he suspects the requirement "will be very loosely interpreted."
Lobasso warned advisors to expect some delays because the expansion of unemployment is new.
He also encouraged ICs to correctly state their status as a nonemployee when submitting their claim for unemployment benefits. If the IC receives instructions that don't seem to apply to an IC, he urges they reach out for clarification before proceeding.
The reasoning is twofold, he said: First, providing inaccurate information will likely delay the claim, and second, mistakenly stating an IC is a W-2 employee could create a headache for the host agency. Lobasso said the state unemployment agency could assume the worker's status as a W-2 or 1099 employee is in dispute and could open up a time-consuming and costly reclassification audit of the agency.
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Host agencies are making efforts to support ICs in a variety of ways as the coronavirus pandemic continues to impact the industry.
Jen Cochrane, co-founder and CEO of the Gifted Travel Network in Mooresville, N.C., said the host is supporting ICs through a number of strategies, including weekly Zoom calls.
"Specifically with respect to economic relief, we have waived commission split fees for two months and streamlined the process and encouraged advisors to clear out unclaimed commission balances," Cochrane said. "We are also paying out protected commissions now, regardless of when the trip was meant to travel."
The host agency itself has not had to implement layoffs or reduce hours thus far, but among other sources of relief, it is looking into applying for relief under the Paycheck Protection Program, a new Small Business Administration (SBA) program brought to life by the Cares Act.
"But we remain strong and we are looking forward to the tremendous upswing in travel that will result once the pandemic subsides," Cochrane said.
Cochrane suggested travel advisors look into economic relief options like unemployment and either of the SBA's Covid-19-related loan options, an Economic Disaster Injury Loan and the Paycheck Protection Program.
She also encouraged advisors to reach out to their credit card companies, many of which are offering waived fees and sometimes waived interest. If they lease space or have a mortgage on their business, she suggested advisors reach out to their bank or landlord to ask to defer payments.