All articles in this COVID-19 Response Resource issue are effective as of March 30, 2020.
The recently enacted federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides significantly expanded unemployment benefits to a hurting U.S. workforce to both self-employed individuals and individuals employed by others. The Act does this by authorizing federal-state agreements, pursuant to which, the federal government will funnel assistance funds to individuals through existing state unemployment compensation (UC) programs. After entry into such an agreement, and subject to the scope of the particular agreement, benefits could include the following:
- Benefits for self-employed individuals. The Act provides federal funding for state UC to self-employed and so-called “gig-economy” workers, adversely impacted by COVID-19, if such workers are not otherwise covered by state UC laws, or if they have exhausted state UC benefits. Under the Act, gig-economy workers will receive the same UC benefit as regular employees receive under the relevant state’s UC law.
- No one-week waiting period. The Act provides for immediate payment of UC benefits to individuals without the one-week waiting period otherwise applicable under most state law. CARES Act section 2105(b). Notably, Utah, Idaho, Nevada and Montana all contain one-week waiting periods that will be waived under the Act following entry by those states into agreements with the Secretary of Labor under the Act.
- Extended benefits period. The Act provides for up to an additional 13 weeks of UC benefits at the applicable state levels than are otherwise provided under state law, through Dec.31, 2020. CARES Act section 2107(b)(2). Payment of benefits is subject to normally applicable rules on the recipient’s active search for replacement employment, etc. Note that Idaho has waived certain work search requirements if the layoff is attributable to COVID-19 and the employer intends to have the employee return to work after the stay-at-home order expires. Other states may also enact certain rules specific to the COVID-19 situation.
- Additional $600/week payments. The Act provides up to four months of Federal Pandemic Unemployment Compensation payments of an additional $600 per individual beyond the individual’s otherwise applicable state entitlement, regardless of what they made over the base timeline. CARES Act section 2104(b)(1)(B). These payments are not pro-rated. Thus, both an employee who will be receiving the maximum UC benefit per week, and an employee who will be receiving less per week, will each receive the extra $600 per-week payment despite the fact that some individuals may receive more in UC than they would have if they had remained employed. These payments (plus any other UC benefits available under the CARES Act) will not commence until a federal-state agreement is entered into. CARES Act section 2104(a), (e)(1), and will cease on July 31, 2020. CARES Act section 2104(e)(2).
- Aid for non-profits, government agencies and Indian Tribes. The Federal Treasury will pay states to reimburse nonprofits, government agencies and Indian tribes for half of the costs they incur to pay for all unemployment benefits through Dec. 31, 2020. CARES Act section 2103.
- Funding for short-term compensation programs. The Act provides funding to so-called short-time compensation or workshare programs, in which employers reduce employee hours instead of laying off workers, and the employees with reduced hours receive a pro-rated unemployment benefit. New short-time compensation or workshare programs established by states prior to Dec. 31, 2020, will receiving funding. This provision would reimburse states for 100 percent of the costs they incur in providing this benefit through Dec. 31, 2020. CARES Act section 2108. Such short-term compensation is capped at an amount equal to an employee’s regular state unemployment benefits for a period of 26 weeks. No reimbursements will be made for benefits paid to individuals who are employed by a participating employer on a seasonal, temporary or intermittent basis. CARES Act section 2108.
- Funding for state workshare agreements. The Act also provides funding to support states that begin short-time compensation or workshare “agreements.” Under these “agreements,” the Treasury would cover 50 percent of the costs that a state incurs in providing short-time compensation through Dec. 31, 2020. The other 50 percent of costs associated with the “agreements” would be paid by participating employers. If a participating state enacts a short-time compensation or workshare law that complies with Section 13 3306(v) of the Internal Revenue Code of 1986, the state would then cease receiving funding under Section 2109 and would be eligible for full reimbursements under Section 2108.
For questions about this or other related issues, please contact Mark Wagner at (801) 536-6676 or send an email to email@example.com.