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Bureaucratic snag leaves thousands of gig workers shut out of relief aid

"It's like there's this huge carrot dangling in front of my face, but it's a few inches away from me and I can't reach it," an out-of-work videographer said.
Daniel Herman, a videographer, was disqualified from the Pandemic Unemployment Assistance program.
Daniel Herman, 30, a videographer and musician from Boulder, Colorado, was disqualified from the Pandemic Unemployment Assistance program.Rachel Woolf / for NBC News

When the COVID-19 pandemic wiped out almost all of Daniel Herman's coming work, he was hopeful that he would get help from the federal government.

Herman, 30, a videographer and musician from Boulder, Colorado, believed he would qualify for Pandemic Unemployment Assistance, or PUA, a new federal relief program for self-employed gig workers and independent contractors. The program was designed to support freelancers like Herman, who would not qualify for traditional unemployment benefits.

But four months later, a bureaucratic glitch has kept Herman shut out of the program. The issue is related to one of the jobs Herman had last year, doing sound for live shows at a coffee shop. The shop put him on the payroll rather than pay him as a freelancer. Even though Herman earned only about $2,600 for the work, a small fraction of his total income for the year, it was enough to punt him into Colorado's traditional unemployment system and disqualify him from receiving Pandemic Unemployment Assistance.

"It's like there's this huge carrot dangling in front of my face, but it's a few inches away from me and I can't reach it," Herman said. "This bill was written to help support gig workers, but this just seems like a huge oversight."

Legal experts, policy analysts and entertainment industry leaders believe that thousands of freelancers and gig workers are in a similar position, shut out of the PUA program because they earned a small amount of traditional wages. The snafu has left many getting far less in weekly benefits than they would through PUA.

Herman's unemployment benefits, for example, are based solely on the money he earned at the coffee shop, without counting the nearly $40,000 he earned through other gigs, such as playing piano and recording live concerts. So instead of at least $223 per week, Colorado's minimum benefit for gig workers under PUA, Herman is getting just $43. (Herman is also getting a $600 weekly subsidy for unemployed workers, but the federal stipend program is slated to end this month.)

"This is a really big issue that not enough people are paying enough attention to," Michele Evermore, a senior researcher and policy analyst with the National Employment Law Project, a workers' rights advocacy group, said of the challenge for gig workers who earn mixed incomes.

The problem dates to the creation of the PUA program in the Coronavirus Aid, Relief and Economic Security Act in March. The law says a person may be eligible to receive either traditional state unemployment benefits (based on income reported on W-2 tax forms) or PUA (based on income reported on 1099 tax forms) but not both. That leaves an unintended gap for workers like Herman, who got both types of income last year.

"Fixing it will be a challenge," Evermore said, adding that one solution would be for Congress to allow workers to choose whether they want to receive PUA or traditional unemployment benefits. "People are really missing out."

Many of the affected workers are actors, musicians and writers, so more than three dozen entertainment industry organizations, including the Screen Actors Guild-American Federation of Television and Radio Artists, have pushed for a change. Hundreds of workers have joined Facebook groups to draw attention to the cause, and an online petition has garnered more than 10,000 signatures.

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The issue has also drawn attention from lawmakers, including Rep. Adam Schiff, D-Calif., who along with 20 other House members sent a letter on May 8 to congressional leaders urging a fix as part of the next COVID-19 aid package.

But it is unclear whether that will be a priority when lawmakers return to Washington this week. Congress is still debating other aid measures, including whether to extend the $600 per week that many workers are getting on top of their unemployment payments, a benefit that is scheduled to end July 31. The looming deadline — along with the expiration of other safety net measures in many states, such as eviction moratoriums — adds urgency for a legislative fix to ensure that gig workers get the benefits they deserve, advocates say.

"That money is the difference between being able to pay rent or not, getting groceries or not, feeding your family or not — it's a really big deal," said Jordan Bromley, a Los Angeles entertainment lawyer who is on the board of the Music Artists Coalition, an artists' rights group.

Bromley estimated based on union membership figures that more than 100,000 California musicians could be shut out of PUA benefits because they have mixes of earnings that disqualify them.

"The music industry was one of the first to stop, and we'll be the last to start," he said. "We're looking at summer 2021 before the industry is fully engaged again, and that is an entire revenue stream for almost all these performers that is gone, so these benefits are their only opportunity for relief."

When the music industry shut down in March, Andrea Black, 41, of Maine, lost all her work as a tour bus driver for bands. She filed for unemployment assistance, assuming that the amount she got would be based on all the jobs she had had as an independent contractor the previous year. But it turned out that one of the bands she worked for paid her about $10,000 through a W-2, which was enough to shut her out of PUA.

Andrea Black, 41, of Maine, a self-employed bus driver for touring bands, was shut out of the Pandemic Unemployment Assistance program.
Andrea Black, 41, of Maine, a self-employed bus driver for touring bands, was shut out of the Pandemic Unemployment Assistance program.Andrea Black

Instead, Black received Maine's traditional unemployment insurance, which she estimates was $100 less per week than what she would have gotten from PUA. It also lasted only 13 weeks, unlike PUA, which offers 39 weeks of benefits.

"That's a huge amount of money for someone like me, who has no idea when they'll be able to get back to work," said Black, whose unemployment benefits ended last week. "It's a weird feeling to wake up every day and calculate how long you'll be able to survive."

Each state sets its own minimum amount someone has to earn on a W-2 to qualify for traditional unemployment benefits. Advocates and policy experts say the minimums have disqualified people for PUA in almost every state.

Anthony DiNardo, 24, was excluded from PUA in Illinois because of a single job. DiNardo, a recent graduate of North Park University in Chicago, supported himself through college by coaching at baseball camps and refereeing Little League games as an independent contractor. He also worked several weeks last year at an Amazon warehouse, making about $1,900 in W-2 earnings. The Amazon job put him just over Illinois' $1,600 threshold to receive traditional unemployment benefits — which meant he was not eligible for PUA.

Anthony DiNardo, 24, was shut out of the PUA program in Illinois.
Anthony DiNardo, 24, was shut out of the PUA program in Illinois.Anthony DiNardo

"It just seems like it's way more complicated than it has to be," said DiNardo, who began receiving $51 per week in traditional unemployment last month, less than the minimum of $198 per week that PUA offers in Illinois.

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For Herman, the road to getting financial assistance has been long and frustrating.

He applied at the end of April, but he did not begin receiving unemployment benefits until June. By then, Herman had already sold three of the four cameras he had used as a videographer to help pay for his rent, bills and groceries.

"It was like a Catch-22, because the very thing I would need when I could actually work again I was not going to have," Herman said.

Daniel Herman, 30, in his backyard in Boulder, Colo. Rachel Woolf / for NBC News

With the lone camera he has left, he is still hoping to find some videography work from clients outside the music industry. He is grateful for the unemployment benefits he has received, but he is not sure how long his savings will last once the $600 stipend is cut off and he is receiving just his base unemployment benefit of $43 per week.

He hopes that lawmakers will not forget those who remain out of work and are not getting the help they need.

"There's a rush to get back to normalcy," Herman said. "But I hope they won't overlook the issues that were not addressed in the first place."