The Department of Labor released guidance to states on Tuesday to begin administering a new $100 weekly enhancement to unemployment benefits for mixed earners through a program called Mixed Earner Unemployment Compensation, or MEUC.
The latest boost, included in the $900 billion rescue package signed into law Dec. 27, 2020, is intended to support workers with multiple income streams who earn the bulk of their pay through 1099 or self-employment work, but are receiving an artificially low benefit based solely on W-2 earnings.
This phenomenon has been especially prevalent in the arts and entertainment community. Take, for example, a musician who earns the majority of her annual salary through performing but also worked as a restaurant bartender on the side. If she lost restaurant work during the pandemic, she would qualify for traditional state benefits based on her bartending earnings; however, she would not be eligible to recover any of her lost self-employment income.
The MEUC supplement is intended to partially recover those lost 1099 earnings due to the pandemic.
Workers currently receiving at least $1 in state unemployment benefits, who earned at least $5,000 in self-employment income in 2019, will be eligible for the extra $100 per week effective Dec. 27, 2020 through March 14, 2021. People who start a new claim this year will have to prove earnings of at least $5,000 in self-employment income from 2020.
The extra $100 supplement will be on top of the $300 weekly federal enhancement available to most aid recipients that states are beginning to pay out this week. People on long-term jobless aid through Pandemic Emergency Unemployment Compensation or their state's Extended Benefits are also eligible for the extra $100 MEUC pay.
Those on Pandemic Unemployment Assistance, which supports self-employed and gig workers without traditional wage income, are not eligible for MEUC.
According to the stimulus package, state unemployment agencies must opt in to providing the extra $100 through MEUC. So far, most states have agreed to provide the boost, according to volunteers behind the site MixedIncome.org, with the exception of Idaho, Mississippi and South Dakota. Notably, South Dakota was the only state to not apply for the Lost Wages Assistance supplement from the fall.
Howes tells CNBC Make It the latest Covid relief legislation is the result of months of ongoing efforts among groups that advocated for mixed earners through 2020, including Democratic members of Congress and arts, entertainment and freelancer organizations and unions.
"It's not a perfect fix, and we're still hoping to do more to help people on the whole," Howes says. "Our hope is that Mississippi, Idaho and South Dakota do the right thing to help mixed earners in those states. At the very least, we want an extension" of federal payments beyond mid-March, when they're currently set to expire.
"With the Senate hopefully flipping, that would put us in a better position to get more aid," Howes adds, referring to the Georgia Senate runoffs that could give Democrats, who have been vocal about providing Americans more pandemic aid, control of Congress.
States that opted in to providing MEUC by the Labor Department's Jan. 2 deadline will provide workers with the full 11 weeks of extra payments.
New states can sign on to the agreement and cover weeks from that point through March 14.
With that said, it could take several more weeks for workers to see the boost.
"We need to be clear it is unlikely that eligible claimants will immediately begin seeing these benefits," said Assistant Secretary of Labor for Employment and Training John Pallasch in a statement. "Any time Congress creates a new program such as MEUC, the states must work with the Department to ensure they are standing up and operating the new program with integrity. To this end, the Department stands ready to help states implement them in a rapid manner to ensure the timely payment of benefits."
States are expected to announce in the coming days what type of documentation they'll require in order for workers to prove their eligibility.