If you’re a freelancer, COVID-19 is probably going to interrupt your cash flow. Here’s how to cope.
Whether you are an independent cinematographer, editor, PA, or you have your own production company, you’re probably going to lose income before the coronavirus pandemic is over. Shoots are being canceled, locations closed, events delayed, and releases and screenings postponed.
UPDATE: With the recently signed CARES Act, freelance and gig workers are now become eligible for unemployment! Check out our primer How the CARES Act Is Going to Save Your Ass for all the new details.
At both the federal and state government level, things are changing quickly.
Here is the U.S. Government via the Department of Labor statement regarding lost income due to Coronavirus:
"The U.S. Department of Labor today announced new guidance outlining flexibilities that states have in administering their unemployment insurance (UI) programs to assist Americans affected by the COVID-19 outbreak. Under the guidance, federal law permits significant flexibility for states to amend their laws to provide UI benefits in multiple scenarios related to COVID-19. For example, federal law allows states to pay benefits where:
(1) An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work;
(2) An individual is quarantined with the expectation of returning to work after the quarantine is over; and
(3) An individual leaves employment due to a risk of exposure or infection or to care for a family member. In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19.”
We will try our best to keep you updated when big changes occur that will help freelance filmmakers and industry artists!
Apply for Unemployment
If the word ‘unemployment’ makes you uneasy, don’t be. You’re not a freeloader. You’re not a deadbeat. We all contribute to our society and taxes in one way or another, and unemployment benefits are here for YOU for exactly this kind of situation. But for some reason, filing for unemployment is scary. Numbers suggest that half of the Americans who are eligible for unemployment don’t apply. How sad is that? Well right now, you need it.
So first, are you eligible?
Most people assume that if they are freelance or self-employed, they can’t collect unemployment. But it depends on your job(s) and your state.
The first step for you will be to call the unemployment department for your state. If you get W-2s from anyone, you are probably eligible. If you are a purely 1099 freelancer, then most likely you are not eligible. (For now...see below!)
Here’s how BalanceCareers explains it:
"In most cases, self-employed workers, independent contractors, and freelance workers who lose their income are not eligible for unemployment benefits. Because employers contribute to a fund for unemployment benefits, their employees are eligible to receive benefits from the government, if they qualify after losing their job. If you are operating as self-employed, you most likely didn't pay into your state's unemployment fund.
If you were paid as an independent contractor and receive a 1099 form, you were not considered an employee and would not be eligible for unemployment. That's because eligibility for unemployment is based upon being employed by an organization that was paying into the unemployment insurance fund."
And here’s how it is described by the California Employment Development Department:
"When filing for UI benefits, you must have earned enough wages during the base period to establish a claim, and be:
- Totally or partially unemployed.
- Unemployed through no fault of your own.
- Physically able to work.
- Available for work.
- Ready and willing to accept work immediately.
- Actively looking for work.
A base period is a specific 12-month term the EDD uses to see if you earned enough wages to establish a UI claim. To learn how we determine your base period, review How Unemployment Benefits are Computed (DE 8714AB) (PDF). Your weekly benefit amount (WBA) ranges from $40 to $450. To get an estimate of what you will receive, use the UI Benefit Calculator."
Enter your state and take a quiz to see if you get benefits at the official gov site here.
Think you are actually an employee but not being considered as one? That's unfair, and many of you may be in this boat. Here's what the IRS determines are the facts that figure into if you are actually an employee:
- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
- Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
- Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
If you think you should actually be considered an employee, then as Larry pointed out to us in the comments, you can fill out an SS-8 form. and If your shenanigans are more complicated, consider hitting up an Employment law attorney.
Get Start-Up Money from Self-Employment Assistance
Delaware, Mississippi, New Hampshire, New York, and Oregon have active Self-Employment Assistance programs. Lucky! If you’ve been earning money as a background actor but actually always wanted to be a set designer, this crisis might be a good time to make your move. Here's how it's described by the Department of Labor ETA:
"Self-Employment Assistance offers dislocated workers the opportunity for early re-employment. The program is designed to encourage and enable unemployed workers to create their own jobs by starting their own small businesses. Under these programs, States can pay a SEA allowance, instead of regular unemployment insurance benefits, to help unemployed workers while they are establishing businesses and becoming self-employed. Participants receive weekly allowances while they are getting their businesses off the ground."
Keep an Eye on the Disaster Relief Fund
At the moment, America's Disaster Relief Fund is not open to people suffering from lost wages due to COVID-19. However, there's a lot of chatter about the Fund being opened to help Americans brave the financial side effects of being quarantined. According to Jay Zagorsky on Marketwatch, here's what could happen:
“During disasters the Stafford Act gives the president the right to declare a “major disaster,” which allows the president to provide unemployment benefits to any individuals who become unemployed as a direct result. Declaring a disaster allows the president to tap the Disaster Relief Fund, which contains billions of dollars. While previous infectious disease outbreaks have been designated “emergencies”—which provides some federal assistance—none has been deemed a major disaster. Expanding the law to include pandemics as major disasters, as some lawmakers have urged, would make it possible for the president to make sure individuals affected by an outbreak have the support they need.
It would only take small changes like these to make the unemployment insurance program more useful to those sick, quarantined or temporarily idled during a pandemic."
State-Specific Relief Funds
There are more funds available, but they differ widely by state. Take a look at other programs offered in your state through Department of Labor here.
Get Creative with Your Side Hustle
Outside of federal and state relief, here’s a list of other ways to cope with the canceling of gigs that were going to get you paid or protect yourself in the future. Here are a few suggestions:
Pitch yourself to clients: Nothing’s stopping you from reaching out over email or phone to people who may need your skills or have had in the past. Time to polish up your reel or website, and send out some feelers!
Upload your films to new platforms: What are people doing now that they are stuck at home? Watching movies and TV! Now is the perfect time to add your film to that platform you had been waiting to use.
Convert yourself to online events: If you have been able to teach others or have live screenings events, consider this now in the virtual form!
Write scripts/develop projects: You’ve been meaning to finish that script, and maybe develop a project that could make you money (and be a career booster) down the road. Here’s your chance! If you need help on getting this accomplished at home, don't forget our 10 Tips for Working from Home During Quarantine.
Switch to S Corp: This is not going to help out in the short term, but in the long term, this might be something to reconsider. If you have a production company that you hold under a sole proprietorship or LLC, you may be frustrated to learn that your self-employment taxes don’t get you unemployment benefits. Wack! If you consider restructuring at an S Corp in the future, when you are again earning a decent amount of dough, you could pay into UI. Here’s how Business2Community explains it:
“Once you understand that you must pay into the system before you can withdraw from the system, the question then becomes, “How do I do that?” For most self-employed people, the answer is to set up an S Corporation. But it is not enough to just set up an S corporation. You must also structure it so that you draw a salary as an “employee” of the corporation and then pay a percentage of your earnings into your state’s unemployment compensation fund.
Creating an S corporation has other implications as well. Overall, you’ll probably pay less taxes, and any liability–such as for debt and other financial obligations—will be borne by the corporation and not the people who own it. The flip side of this is that as an employer, you’re required to pay Medicare and Social Security taxes on wages for your employees, including any salary you pay yourself."
Reach out to other filmmakers: There’s no guarantee that other filmmakers will be able to get you work, because we're all scrambling. But that should not stop us from reaching out to each other during this crazy time. We’ve all chosen the path of filmmaking in our various roles, which means we've all taken this bump road without job security. We’ve done so because it gives meaning to our lives. We’re all in this together. If you’ve never been the type to reach out to others before, consider it a good time to start. I can’t guarantee I will respond quickly (a problem of mine long before COVID-19), but if you’re feeling isolated as a filmmaker, feel free to shoot me a message.
Any other advice out there for fellow filmmakers on patching lost income during COVID-19? Do share in the comments.