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Lawmakers aim to close gap that prevented gig workers from getting relief aid

The bill would help thousands of freelancers who have been shut out of the Pandemic Unemployment Assistance program.
Daniel Herman, 30, a videographer and musician from Boulder, Colo., was disqualified from the Pandemic Unemployment Assistance program, intended for gig workers, because a coffee shop put him on the payroll. Rachel Woolf / for NBC News

Two California lawmakers announced a bill in Congress on Monday that would help thousands of freelancers who have been shut out of the federal aid program to support out-of-work independent contractors.

The Mixed Earner Pandemic Unemployment Assistance Act, introduced by Reps. Adam Schiff and Judy Chu, both D-Calif., aims to correct an unintended gap in the Coronavirus Aid, Relief and Economic Security Act passed in March. The law left thousands of gig workers who earned incomes from both traditional jobs and independent contract work with little or no financial relief.

"It was certainly not Congress' intention that people with mixed income would lose out," Schiff said.

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Pandemic Unemployment Assistance, or PUA, was designed to help gig workers who have not historically qualified for traditional unemployment benefits.

But the law says people may receive PUA (based on income reported on 1099 tax forms) or traditional state unemployment benefits (based on income reported on W-2 tax forms), but not both. That meant many freelancers who earned small amounts of traditional wages were ineligible to receive PUA and were instead punted back into the states' traditional unemployment systems. The snafu has left many getting far less in weekly benefits than they would through PUA.

"There is no reason these workers should be penalized now for having a mixed income," Chu said in a statement.

The legislation, co-sponsored by 19 other Democrats, would give states a way to allow freelancers to opt into the PUA program even if they also had income streams from traditional jobs. Their weekly unemployment benefits would be calculated based on their earnings from both wage work and self-employment.

The bill would also provide retroactive assistance to gig workers who have not qualified for regular unemployment or PUA. And their weekly benefits would retroactively include the additional $600 weekly benefit implemented by the CARES Act.

"The goal is that people shouldn't lose out on income in the past because they felt they fell in this subcategory," Schiff said. "So we want to make people whole."

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.

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The bill, which does not yet have a counterpart introduced in the Senate, would allow states to choose whether and when to implement the expanded coverage for mixed-income earners. Schiff said he did not make the expansion a requirement because state employment offices are already overwhelmed.

"Certainly, our hope and our expectation is that all the states will choose to adopt it," he said.