Hundreds of thousands of California independent contractors and gig workers will likely not have to reimburse the state for overpaid Pandemic Unemployment Assistance (PUA) benefits.
The new COVID-19 stimulus package signed into law allows states to waive attempts to collect excessive PUA payments as long as workers meet two requirements:
- Their original PUA application was filed in good faith
- Repaying the state would result in financial hardship
Confusion existed over initial applications
Under the March 2020 coronavirus relief bill, thousands of gig workers reported their total earnings to the Employment Development Department (EDD), which oversees the state’s PUA. However, they were supposed to report how much they made after deducting expenses.
That led to thousands of workers receiving more aid than they should have gotten – some up to $10,000 more. Once the errors became evident, the EDD later tried to get the overpayments back by asking workers to verify their net incomes. Under the initial relief bill, states could not waive efforts to collect overpayment amounts. But that changes under the current extension.
Waivers are typically granted during recessions
The National Employment Law Project says state agencies generally approve waivers in these cases. Californians who receive a notice of overpayment can file for the waiver by completing a Personal Financial Statement verifying their income.
Mistakes often happen during economic emergencies, and in this case, vague language in the original PUA led to a widespread misunderstanding. The Law Project says the EDD has shown compassion in the past and approved waivers in most cases, especially if repayment causes economic hardship.
Aid extended through March 2021
The newly-signed aid bill essentially extends the PUA through at least March 21, which means nothing has changed. However, gig workers and independent contractors who file for aid should report their “net” income, meaning the amount they receive after deducting expenses.
Some gig workers may qualify for unemployment benefits
The passage of Proposition 22 redefines gig workers as independent contractors – affecting hundreds of thousands of Uber and Lyft drivers as well as those working for app-based delivery services. However, prior to that measure taking effect in mid-December, many of those workers were classified as employees under Assembly Bill 5.
Groups representing gig workers urge those individuals to file for regular unemployment benefits, which could mean thousands of dollars more in payments compared to the PUA. Under AB 5, most of these workers were entitled to receive benefits, including unemployment insurance, for the past 18 months before Prop. 22 went into effect.