An employee who has been misclassified as an independent contractor will face multiple road blocks as they seek out unemployment benefits. The California Employment Development Department (“EDD”) generally offers unemployment insurance (UI) to employees who have lost their job and meet the program edibility requirements. Relevantly, since employment is the basic condition for unemployment eligibility, the individual seeking UI may not be an independent contractor.
Thus, the classification of the individual is essential.
Once an individual files a UI claim, the EDD will then mail a Notice of Unemployment Insurance Claim Filed to the employer. The employer may then provide the EDD with relevant eligibility information. The EDD will then send the claimant one of several responses.
The EDD may send claimant a Notice of Unemployment Insurance Award. In the case of a misclassification the employee may receive an “award” of $0. At that point the that individual can provided the EDD a summary about why the individual disagrees with the determination and request an investigation. Specifically, the individual could raise that they have been misclassified. The EDD will then make a further determination of status.
Alternatively, an employee may receive a Notice of Status of Wages indicating that they do not qualify for UI because insufficient earnings were reported to the EDD. In that case the misclassified employee can appeal the decision.
In the new COVID-19 world, said employee has a third option to obtain benefits. That individual—who does not proceed with an investigation regarding the Benefits award or an appeal of the Status of Wages—can apply for Pandemic Unemployment Assistance (PUA). PUA is available to both independent contractors and employees. Thus the misclassification issues will not result in a denial of benefits.