Can Contract Employees Collect Unemployment?

Q. Are hourly paid contractors hired via consulting firms and placed at other companies eligible for unemployment once their contracting assignment ends? I just finished an 18 month assignment and was curious what the rules were. All applicable federal, state and local taxes were taken out of my income by the consulting firm during my employment. Am I considered an employee of the company or the contract firm?

A. Contracting through consulting firms has become an attractive option for both employees and employers as the market is changing more quickly than ever. An 18 month contract comes close to the average length of employment for many non-contract jobs. Job seekers have recognized the positive aspects of contracting as a new status of employment that no longer has negative stigma. Many employers are looking at their workforce being comprised of full-time and part time permanent employees, contract employees, seasonal employees and temps, or temporary workers. These types of staff allow organizations to ramp up and down based on economic conditions, seasonal changes or a significant change in business direction.

Employees can accept jobs where they can use the skills they most prefer to use and employers can hire for the direct talent or project skill they need. Employees often have the opportunity to develop new cutting edge skills while involved in these projects and employers can hire the people they need to take on a project with no longer commitment than the completion of that project.

If you were paid by the contract consulting firm, you are considered the firm’s employee even if you are based at another company and managed by that company’s staff. While the Department of Unemployment Assistance (DUA) makes the final determination on all unemployment claims, there are clear rules about eligibility available at the site.

I consulted Scott Ragusa, President of Winter Wyman Contract Staffing based in Waltham, MA. Scott points out, “Contract employees are just that, employees. If you completed your assignment, you are eligible for unemployment. One of the benefits of contracting is the ability to continue working without losing access to benefits due to any employee. And if you complete the assignment, or if the company no longer needs your expertise, you are eligible to collect unemployment benefits.”


If your contract experience was positive for you and the organization, the contracting firm will most likely be eager to employ you again.

Contract employees hope for a professional relationship with employers and the reverse is also true. Organizations who treat their contract employees well and as part of the employee base, are typically offered the same level of professional treatment when contract employees transition.

Jump To Comments


This discussion has ended. Please join elsewhere on