As shelter-in place orders went into effect throughout the nation in an attempt to curb the spread of COVID-19, businesses have closed their doors leaving their employees and workers without pay or employment. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law in an attempt to provide temporary financial relief for workers affected by COVID-19.
The CARES Act expanded eligibility to include those who are traditionally excluded from receiving benefits to allow them to receive up to 39 weeks of benefits. The duration for benefits was enhanced by an additional 13 weeks, provided that they are able to work, available for work, and actively seeking work. A bonus of $600 per week will be paid on top of the weekly benefit amount an eligible worker will receive under state law for four months, ending July 31, 2020.
The federal CARES Act “Pandemic Unemployment Assistance” (PUA) program expands state eligibility requirements to provide unemployment insurance benefits to the self-employed, independent contractors, freelance workers, workers in the “gig” economy, and part-time workers, so long as these applicants can show that they are not able to work due to a COVID-19 related activity, such as:
Their place of employment was closed because of COVID-19
They were diagnosed with or are experiencing COVID-19 symptoms and seeking diagnosis
They are serving as primary caretaker to their children due to school or daycare closure
They are taking care of a family member or member of household affected by COVID-19
A member of their household was diagnosed with COVID-19
They are subject to an imposed quarantine or medically advised self-quarantine due to COVID-19
They scheduled to start new employment but are unable to start due to COVID-19
They are responsible for supporting household due to the head of household who died from COVID-19
They quit a job due to COVID-19
For workers who have exhausted their regular state unemployment insurance and are “able to work, available for work, and actively seeking work”, under the “Pandemic Emergency Unemployment Compensation” (PEUC) program of the CARES Act, these workers’ benefits are extended by an additional 13 weeks. Therefore, an employee in California who is eligible for unemployment insurance benefits would receive benefits for the standard 26 weeks plus the additional 13 weeks under the CARES Act, for a total of 39 weeks.
Workers are not eligible for unemployment insurance benefits if they are able to work remotely or if they are on paid medical or sick leave. Once the paid leave is exhausted, however, they would then become eligible for unemployment insurance benefits and should apply.
Unemployment insurance benefits under PUA cover period starting January 27, 2020 through December 31, 2020.
The PEUC program cover period from when the state signs the agreement with the Department of Labor through December 31, 2020.
The CARES Act incentivizes states to waive the one-week waiting period before a recipient can start receiving unemployment insurance benefits by providing 100% funding. Therefore, benefits should start immediately.
While each state uses different methods for calculating how much unemployment insurance benefit each eligible worker will receive, the benefit amount is generally based on the worker’s average wages, up to a max amount. For example, Mississippi provides benefits of $235 per week, while Massachusetts pays up to $823 per week.
As long as the worker is eligible for receiving benefits through their state unemployment insurance program, the “Federal Pandemic Unemployment Compensation” (FPUC) program of the CARES Act, augments the worker’s weekly pay by an additional $600 through July 31, 2020. Each state is required to sign an agreement with the Department of Labor in order to offer this benefit.
Some states offer Work Share programs, which serve to keep employees from being laid off or furloughed by allowing the approved employer to reduce the employees’ hours and pay while allowing those affected employees to receive partial unemployment insurance benefits from the state.
Under the CARES Act, the “Short-Term Compensation” program will reimburse 100% of benefit costs states paid out through their existing Work Share program, up to 26 weeks.
The unemployment insurance benefit enhancements under the CARES Act should play a critical role in supplementing the loss of income for all affected workers, especially for those who are self-employed, independent contractors, freelance workers, and workers in the gig economy, during this pandemic. Similarly, workers who have otherwise maxed out their state provided unemployment benefits can reapply to extend their benefits for an additional 13 weeks, and, for weekly benefits paid prior to July 31, 2020, they will also receive the $600 bonus payment under the FPUC program. Because unemployment insurance benefits will be administered by each state, the application process as well as the payout process will largely dependent on each state’s program and roll out process.
In California, unemployment insurance applications are not available for the self-employed, independent contractors, freelance workers, or workers in the gig economy. These applications are scheduled to open on April 28, 2020, with payments scheduled to start on April 30, 2020. Payments are retroactive. The additional $600 pay will also be retroactive to March 29, 2020.