Can I get TWC unemployment after switching from W2 to 1099 contract with a startup?

The short answer is: it depends, but you might be eligible. TWC looks at what's called your "base period" to determine benefits - basically the first 4 of the last 5 completed calendar quarters before you file. If your W2 work falls in that period, those wages can qualify you. But there's a catch with 1099 work - you'd need to have lost the contract through no fault of your own, just like with regular employment. The bigger issue is that when you're a 1099 contractor, you're technically self-employed. Self-employed people don't generally qualify for unemployment in Texas unless they paid unemployment taxes on themselves (most don't). My suggestion: Take the gig if it's a good opportunity, but keep some savings as a buffer in case things don't work out.

im in kinda the same boat rn. worked w2 for years then went 1099 for a consulting gig thats ending next month. asked my friend who works at twc and she said it's complicated lol. something about how ur not technically laid off if ur contract just ends? but my friend also said if ur startup specifically cancels ur contract early that might be different

This is actually a complex situation that I can help clarify based on my experience with TWC rules. When you switch from W2 employment to 1099 contractor status, TWC considers this a voluntary separation from your W2 job. If you later try to claim benefits, they may question why you left your W2 employment. However, if your W2 wages fall within your base period (first 4 of the last 5 completed calendar quarters before filing), AND your 1099 contract is legitimately cancelled through no fault of your own (company closure, lack of funds, etc.), you may be eligible for benefits based on those previous W2 wages. The key factors TWC will consider: 1. Did you have sufficient wages in your base period? 2. Was the ending of your 1099 work involuntary and through no fault of your own? 3. Are you available and actively searching for work? I would recommend getting the contract terms in writing, especially conditions for termination. This documentation will be crucial if you need to file for unemployment later.

The TWC system is COMPLETELY BROKEN when it comes to 1099 workers!! I went through this exact situation last year and it was a NIGHTMARE. They denied my claim saying I "voluntarily left" my W2 job to become self-employed, even though my 1099 contract was cancelled when the company lost funding. I appealed TWICE and spent HOURS on the phone trying to get through to anyone who could help. They just don't understand how modern work arrangements operate. Their system is designed for traditional employment from the 1980s. If you have ANY other options besides relying on TWC after 1099 work, take them. Save 6 months of expenses if possible!

When I was in a similar situation, I finally got through to a TWC representative by using Claimyr (claimyr.com). They helped me bypass the busy signals and actually speak to someone who explained my options. They have a video showing how it works: https://youtu.be/V-IMvH88P1U?si=kNxmh025COIlIzKh The agent I spoke with explained that in Texas, they look at your situation case-by-case. What helped me was having documentation showing my contract was terminated early due to company funding issues, not just that it naturally ended. The TWC agent also mentioned I should keep detailed records of all communications about the contract ending.

my brother works for twc and says theres a big difference between "contract ended" and "contract terminated early" in how they decide claims. if ur startup actually runs out of money and has to break the contract early, save ALL emails and documentation about that!!! thats what will help ur case. if the contract just reaches its natural end date, thats harder to get benefits for.

One more important thing to consider: If you do take the 1099 position, you might want to pay into the Self-Employment Assistance Program. It's optional for self-employed individuals in Texas, but it can help establish your eligibility for benefits if needed later. Also, be aware that if you do qualify for benefits, they'll be based on your W2 wages during the base period, not your 1099 earnings. So if your 1099 contract pays significantly more than your W2 job did, your potential benefits won't reflect that higher income. And remember that you'll need to meet the work search requirements (minimum 3 work search activities per week in Texas) and be available for full-time work to maintain eligibility once approved.

Just want to share my experience - I worked W2 for 5 yrs, took a 1099 gig, it ended after 8 months when company restructured. Applied for unemployment and got DENIED!!! They said I "voluntarily left the workforce" by becoming self-employed!!! Had to appeal and provide sooooo much documentation. Finally got approved but took 6 weeks with no income. Just be prepared for that!!

Thank you all SO much for the advice! I think I'm going to take the startup position but with some serious precautions: 1. I'll make sure the contract clearly outlines early termination conditions 2. I'll build up emergency savings to cover at least 3 months in case there's a TWC fight 3. I'll look into that Self-Employment Assistance Program 4. I'll keep detailed documentation of all communications about the job It sounds like I might qualify based on my W2 base period, but that I should expect challenges and possibly appeals if I need to file. This has been incredibly helpful - exactly the real-world insight I was looking for!