Choose Site

LawFlash

Unemployment Benefits in the CARES Act

March 30, 2020 (Updated 04/07/2020)

In three new Unemployment Insurance Program Letters, the US Department of Labor (DOL) issued guidance to state workforce agencies to implement the unemployment provisions in the CARES Act. The guidance has several important aspects for employers.

The Relief for Workers Affected by Coronavirus Act (Act), part of the CARES Act, provides enhanced unemployment payments for workers traditionally eligible for unemployment benefits. The new law also expands the scope of individuals eligible for benefits, including those with insufficient work history, independent contractors, and the self-employed. Additionally, the Act provides temporary federal funding to states for short-time compensation programs.

The DOL’s letters issued April 2, 4, and 5, Nos. 14-20, 15-20, and 16-20, summarize the various unemployment-related provisions in the Act and contain the DOL’s interpretation of several important provisions. We use here the acronyms the DOL uses in its letters to identify three programs: Federal Pandemic Unemployment Compensation (FPUC) (Section 2104), Pandemic Emergency Unemployment Benefits (PEUC) (Section 2107), and Pandemic Unemployment Assistance (PUA) (Section 2102).

We provide an updated summary below to incorporate this DOL guidance, but of particular note for employers in the guidance:

  • While the Act provides for some flexibility for states in making benefits determinations, “quitting work without good cause to obtain additional benefits would be fraud,” and would require the claimant to pay back the benefits and make them subject to prosecution under 18 USC § 1001.
  • The DOL provides examples of the coronavirus (COVID-19) related reasons for PUA eligibility.
  • If an individual is entitled to “at least one dollar” of underlying benefits for a claimed week, the individual will receive the full extra $600 per week through July 31.
  • States may not charge employers for the extra $600 per week payments.
  • The $600 per week is disregarded for purposes of calculating an individual’s income eligibility for Medicaid and CHIP.

Federal Pandemic Unemployment Compensation (FPUC)

Individuals eligible for state unemployment benefits—as determined by respective state law—will receive their state unemployment benefits (up to 26 weeks in most states) plus an extra $600 per week through July 31, 2020. For state-law eligibility, individuals will ordinarily need to show that they are able to work, available to work, and actively seeking work. If an employee has quit a job, the individual will need to show they had “good cause” to quit to be eligible, and state standards differ on what constitutes good cause.

The extra $600 per week payments will be available for weeks starting the date the individual’s state enters into an agreement with the Secretary of Labor to provide these benefits and then will be available through July 31. Multiple states have announced that they have already entered into these agreements.

After an individual has exhausted all state and federal unemployment benefits, such individuals may become eligible for additional benefits, as described below.

Pandemic Emergency Unemployment Benefits (PEUC)

PEUC is available to individuals who have exhausted their state and federal unemployment benefits and who continue to meet the usual unemployment requirements of being able to work, available to work, and actively seeking work. But states may be flexible in determining that an individual is “actively seeking work” if the individual is unable to search for work because of COVID-19 (including illness, quarantine, or movement restriction).

Eligible individuals would receive their regular state unemployment weekly benefit amount for up to an additional 13 weeks, through December 31. In addition, up until July 31, they would receive an extra $600 per week.

Pandemic Unemployment Assistance (PUA)

PUA is available to individuals who would otherwise not be eligible for state or federal unemployment benefits, including individuals lacking sufficient work history, independent contractors, and those who are self-employed. It also covers individuals who have exhausted all rights to state or federal unemployment benefits and those not eligible for PEUC. PUA benefits are available for up to 39 weeks (which may be extended) beginning January 27, 2020, and ending December 31, 2020.

To be eligible for PUA benefits, an individual must self-certify that they are able to work and available to work under applicable state law but that they are unemployed, partially employed, or unable to work because of at least one of the following reasons:

  1. They are diagnosed with COVID-19 or have symptoms of COVID-19 for which they seek a medical diagnosis
  2. A member of their household has been diagnosed with COVID-19
  3. They are providing care for a family member or household member who has been diagnosed with COVID-19
  4. A child or other person in the household for which they have primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency, and having that school or facility care available for the household member is required for the individual to work
  5. They are unable to reach their place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency
  6. They cannot reach their place of employment because a healthcare provider has told them to self-quarantine due to concerns related to COVID-19
  7. They were scheduled to start employment and do not have a job or are unable to reach the job as a direct result of the COVID-19 public health emergency
  8. They have become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19
  9. They had to quit their job as a direct result of COVID-19
  10. Their place of employment is closed as a direct result of the COVID-19 public health emergency
  11. The individual meets any additional criteria established by the Secretary of Labor.

The DOL’s guidance provides illustrative examples for the COVID-related PUA reasons above.

For example, an individual has “primary caregiving responsibility” for a child or other person in the household if they are required to remain at home to care for the child or other person. This includes an individual whose job allows for telework, but for whom the provision of care to the child or other person with a closed school or other facility requires such ongoing and constant attention that it is not possible for the individual to perform work at home.

In addition, the DOL’s guidance provides only one limited example for what seems like an expansive catch-all provision: an individual who “had to quit his or her job as a direct result of COVID-19.” The example provided by DOL is as follows: an individual who was diagnosed with COVID-19 by a qualified medical professional, and although the individual no longer has COVID-19, the illness caused health complications that render the individual objectively unable to perform his or her essential job functions, with or without a reasonable accommodation.

As to the Secretary’s authority to include individuals who meet any additional criteria established by the Secretary, the DOL’s guidance adds only one situation: an independent contractor may qualify for PUA if they are unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited their ability to continue performing their customary work activities, and has thereby forced the individual to suspend those work activities. For example, a rideshare driver may qualify if they were forced to suspend operations because an emergency order restricting movement makes the driver’s continued operations unsustainable.

Individuals who have the ability to telework with pay or who are receiving paid sick leave or other paid leave benefits are generally not eligible for PUA. However, that is not a blanket exemption. Individuals who are receiving sick leave or other paid leave benefits that provide them less pay than their customary work week pay may still be eligible for PUA, as will individuals who are teleworking but are working less hours than the individual customarily worked before the COVID-19 pandemic. In these cases, the income from paid leave and telework will be subtracted from the PUA benefits.

For the self-employed and others who would not qualify for state unemployment benefits (e.g., independent contractors and individuals lacking sufficient work history), the weekly benefit amounts will be calculated in a manner that will vary by state. In addition, PUA beneficiaries will receive an additional $600 per week for weeks of unemployment beginning March 27 through July 31.

For purposes of PUA, “lacking sufficient work history” means an individual “(1) with a recent attachment to the labor force (2) who does not have sufficient wages in covered employment during the last 18 months to establish a claim under regular UC, and (3) who became unemployed or partially unemployed because of one of the COVID-19 related reasons identified under Section 2102.” Further, “[d]emonstration of a recent attachment to the labor force for PUA coverage purposes also includes individuals who had a bona fide offer to start working on a specific date and were unable to start due to one of the COVID-19 related reasons identified under Section 2102.”

For individuals with sufficient work history, the weekly benefit amounts are their respective state unemployment benefits (if they were eligible), plus $600 per week for weeks of unemployment beginning March 27 through July 31.

The 39-week limitation of PUA is reduced by the weeks that the individual received other state or federal unemployment benefits, but not by weeks of PEUC.

Short-Time Compensation Programs

Temporary Financing of Short-Time Compensation Programs in States with Programs in Law (Section 2108)

The Act also provides temporary federal funding for states with work share programs, also known as short-time compensation programs. Under these programs, employers can enter into an agreement with a state unemployment office to reduce employee hours instead of laying off the employees, and employees with reduced hours are then eligible for partial state unemployment benefits (for which they would not have been normally eligible).

Under the Act, the federal government would fully fund costs to states with existing short-time compensation programs available under state law (or states that amend their laws to provide for these programs) for these unemployment benefits through December 31, 2020, plus $600 per week through July 31. The federal government would not provide funding, however, for individuals employed on a seasonal, temporary, or intermittent basis.

Temporary Financing of Short-Time Compensation Programs in the Absence of Those Programs in State Law (Section 2109)

States whose laws do not provide for a short-time compensation program may enter into an agreement with the Secretary of Labor to provide these benefits (but not for individuals employed on a seasonal, temporary, or intermittent basis), beginning on the date of the agreement through December 31, 2020, plus $600 per week through July 31. Employers who choose to enter into short-time compensation agreements with these states must pay half of the costs of those benefits (but not the $600 per week). States are then entitled to reimbursement from the federal government for the state’s half.

CORONAVIRUS COVID-19 TASK FORCE

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.

CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Chicago
Christopher J. Boran
Ross H. Friedman
Thomas F. Hurka

Washington, DC
Chai R. Feldblum