Expanded Unemployment Compensation Benefits and the CARES Act
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On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES). The CARES Act is a $2 trillion relief bill that received strong bipartisan support in both the Senate and House of Representatives. It is the largest economic stimulus package in American history. In addition to providing direct payments to individuals and providing loans to businesses, the CARES Act greatly increases unemployment benefits for most employees who are otherwise eligible to receive benefits and further expands coverage to individuals affected by COVID-19 who would normally not be eligible to receive unemployment benefits.
Extended Benefits and No Waiting Period
In most states, individuals can receive up to a maximum of 26 weeks of unemployment benefits. The CARES Act extends unemployment benefits for an additional 13 weeks so that individuals in most states will be eligible to receive a total of 39 weeks of unemployment benefits. The extended 13-week benefit period expires on December 31, 2020.
The CARES Act waives the one-week waiting period that most states enforce. Therefore, individuals will immediately be eligible to receive unemployment benefits after they are laid off.
The extended benefits and waiver of the waiting period generally apply to all persons eligible to receive unemployment benefits regardless of whether they provide a self-certification that the unemployment has been caused by COVID-19. (See below for more on self-certification.)
Additional $600 Weekly Benefit
The CARES Act significantly increases the amount of unemployment benefits. Laid off workers will be entitled to regular unemployment benefits, which constitute some percentage of the worker’s base rate of usual earnings as established by state law. The CARES Act adds an additional weekly payment of $600 for most workers for up to four months. This is a flat sum that the worker will receive in addition to his or her regular unemployment compensation benefits.
Congress believes that the combined amounts of regular unemployment benefits plus the weekly $600 payment will equal full replacement wages for most workers. In fact, some individuals will actually receive more in unemployment benefits than they would have received in regular wages if they continued to work. This is because the $600 weekly payment is not adjusted based on an individual’s normal earnings.
The $600 increase generally applies to all persons who are otherwise eligible to receive unemployment benefits regardless of whether they provide a self-certification that the unemployment has been caused by COVID-19. (See below for more on self-certification.) The additional $600 weekly payments expire on July 31, 2020.
Expanded Coverage to Individuals who Cannot Work Because of COVID-19 Related Reasons
Individuals who would not otherwise be eligible for unemployment benefits under a state’s traditional unemployment program might now be eligible for benefits because the CARES Act extends coverage to additional individuals affected by COVID-19. An individual who would normally not receive benefits could be eligible if he or she provides a self-certification that he or she is otherwise able and available to work within the meaning of state law but that he or she is unemployed, partially unemployed, or unavailable for work because of one of the following reasons related to the COVID-19 crisis:
- The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- A member of the individual’s household has been diagnosed with COVID-19;
- The individual is providing care of a family member or member of the individual’s household who has been diagnosed with COVID-19;
- The individual’s child or other individual in the household for whom the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of a COVID-19 public health emergency and such school or facility care is required for the individual to work;
- The individual is unable to reach his/her place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;
- The individual is unable to reach his/her place of employment because the individual has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
- The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of a COVID-19 public health emergency;
- The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;
- The individual has to quit employment because of a direct result of COVID-19; or
- The individual’s place of employment is closed as a direct result of the COVID-19 public health emergency.
Congress has authorized the Department of Labor to establish additional criteria that could further expand eligibility for unemployment benefits.
Notably, individuals who have the ability to telework with pay are excluded from coverage of the expanded definition of eligible individuals. In addition, individuals who are receiving paid sick leave or other paid leave benefits are excluded from coverage of the expanded definition of eligible individuals for the period in which they are receiving those other benefits.
Expanded Coverage to Non-traditional “Employees”
The CARES Act expands unemployment benefits to self-employed persons and independent contractors who cannot work because of one of the COVID-19 related reasons set forth above. These individuals are typically excluded from coverage under most states’ unemployment compensation programs. Likewise, many individuals with limited work histories who would normally not be eligible for unemployment benefits will be eligible for benefits under the CARES Act. The expanded coverage will end on December 31, 2020.
Funding for Short-time Compensation Programs
The CARES Act also provides funding for short-time compensation programs (also referred to as work-share programs) that are administered at the state level. Only 28 states currently have such a program in place. We may see states adopt or expand such programs to take advantage of the additional federal funds.
Short-time compensation programs allow employers to reduce employee hours rather than conducting layoffs. The employee then receives a pro-rated unemployment benefit. Seasonal, temporary, or intermittent employees are not eligible to participate in short-time compensation programs. Employers must submit any such plan to the state unemployment office for approval before implementing the plan.
Separately, some states provide unemployment compensation benefits to employees who experience “partial unemployment” and to employees who receive low wages because their hours have been reduced during a benefit period. This practice remains unchanged.
Additional Guidance to Come
Each state will need to enter into an agreement with the federal government to take advantage of the expanded unemployment benefits. Thereafter, each state will issue guidance as to how it will administer unemployment benefits under the CARES Act. The expectation is that each state will implement a program consistent with the CARES Act, but actual implementation will certainly vary from state-to-state. In addition, the U.S. Department of Labor will be providing additional guidance relating to application of the CARES Act to state unemployment systems.
Please visit our Coronavirus Employment Resources page.