The first round of the Coronavirus Aid Relief and Economic Security Act (CARES Act) payments, an economic rescue package designed to provide some relief to Americans affected by COVID-19, have started to arrive. Besides direct payments to individuals, the act provides tax and loan respite for businesses and funding for healthcare workers. The CARES ACT also provides increased unemployment benefits to those out of work due to the pandemic. The information we get can be a bit overwhelming and confusing, so our focus this month is on the changes to unemployment benefits resulting from the CARES Act that employers need to know.
Changes to unemployment benefits for those who are already eligible
- Individuals receiving state unemployment benefits will receive an additional $600 per week through July 31, 2020. In some cases, low- and moderate-income workers will earn more from unemployment that they earned while working.
- Benefits are extended from 26 weeks to 39 weeks (in most states).
- Individuals still must meet eligibility requirements under state law — ability to work, available for work, and actively seeking work.
- To motivate states to waive the usual 7-day waiting period for benefits, the federal government will reimburse states the full amount of unemployment benefits paid during that first week of unemployment.
Benefits for persons not ordinarily eligible for unemployment
- A temporary, federally funded “Pandemic Unemployment Assistance” program grants unemployment benefits to some individuals not typically eligible, including independent contractors and people with limited work histories, if they are out of work due to COVID-19.
- These benefits apply retroactively, so recipients will be eligible if they were not able to work due to COVID-19 for any 39-week period between January 20 and December 31, 2020. Under this provision, individuals will self-certify that they are able to work but are not working due to COVID-19-related reasons.
- Unlike traditional requirements, these individuals do not need to prove that they are seeking work in order to qualify for benefits.
Reimbursement for work share programs
- The CARES Act provides federal reimbursement of 100% of the funds paid to employees working reduced hours in a state authorized short-term or work share program. Employees would be eligible for partial unemployment benefits if employers cut hours rather than lay off workers.
- These benefits would be prorated amounts of what they would receive if fully unemployed. For example, if hours are reduced by 30%, they would be entitled to 30% of the applicable unemployment payment.
Benefits for charities that have opted out of state unemployment insurance
The CARES Act provides funds to be transferred to states from federal unemployment funds to reimburse 501(c)(3) organizations, government agencies, and Indian tribes that do not participate in state unemployment programs. Reimbursement will be 50% of paid employment benefits between March 13, 2020 and December 31, 2020.
The role of state unemployment offices
Although the CARES Act is funded by federal funds, administration of benefit is up to the state unemployment offices after official agreements with the Department of Labor. Some states are still uncertain of the best approach to administration of the act’s provisions and are waiting for further guidance.
Guidance for the unemployment insurance program includes a directive to states to protect the integrity of the program and make sure that benefits go only to those who qualify. Employers should be sure to respond accurately for information from state unemployment offices, even as the impact of the program may result in changes in administration. Reach out to your employment attorneys to ensure that you understand and comply with the program. As always, we are happy to help.