The California Employment Development Department (EDD) urged independent contractors to file a claim for unemployment and EDD would look into whether the independent contractor was misclassified. In general, independent contractors are not eligible for unemployment benefits unless they pay unemployment taxes. During the COVID-19 crisis, independent contractors are eligible for unemployment benefits by filing for Disaster Unemployment Assistance and under the CARES Act.
EDD is encouraging independent contractors to file for unemployment claims because EDD has a process for determining if an independent contractor is misclassified. If EDD determines that the independent contractor was misclassified, EDD will look to the company that engaged with the independent contractor for unemployment taxes.
As the crisis continues, we will see if there is an increase in the number of claims that independent contractors were misclassified as a way for some independent contractors to obtain employee benefits.