Anticipating layoffs, reductions in hours and absences resulting from the coronavirus pandemic, the U.S. Department of Labor (DOL) issued guidance to states on March 12 addressing the eligibility of affected workers to receive unemployment compensation (UC) benefits. Actual eligibility depends on each state’s law. DOL also flagged areas where states can exercise flexibility, including amending state law to increase the availability of benefits where an employee is directed to be quarantined or where it is prudent to do so.
DOL opined that an individual who is quarantined or otherwise affected by COVID-19 may be eligible for UC benefits depending on state law. However, UC benefits are not intended to be used as paid sick leave. (Note: It is expected that new federal legislation will be enacted during the week of March 16 to provide for paid sick leave in certain circumstances and to expand unemployment compensation benefits.)
DOL advised that its longstanding legal interpretation of federal UC law is that "unemployment" includes a reduction of both work hours and earnings. An individual receiving paid sick leave or paid family leave is still receiving pay and would not be eligible for UC benefits.
Federal UC law requires that claimants be able to work, available for work, and actively seeking work. These federal requirements cannot be categorically waived or exempted for individuals affected by COVID-19. Yet states have significant discretion to establish how individuals demonstrate that they are meeting these requirements.
Scenarios
DOL provided specific scenarios to help states assess UC eligibility for individuals affected by COVID-19. In each, the individuals may be unemployed as they have reduced hours and pay. In essence, in DOL’s view, an individual need not quit or be discharged to potentially be eligible for benefits.
Scenario 1: Employer temporarily ceases operations
An employer or employing unit temporarily shuts down due to COVID-19 with the expectation that the individual will return when business resumes.
Federal law would permit a state to treat the separation here as a temporary layoff. States have significant discretion to determine able, available and work search requirements, and a state can determine that the suitable work for this individual is the job she intends to return to after business resumes. Individuals are able to and available for work if their employer temporarily laid them off and the individuals remain available to work only for that employer. Thus, for states that take this approach, individuals may only need to be able and available for that job and, to meet the work search requirement, take reasonable steps to preserve their ability to come back to that job.
Scenario 2: Individual is quarantined and will return to employer
An individual is quarantined by a medical professional or under government direction, and the employer has instructed the individual to return to work after the quarantine is over or has not provided clear instruction to do so.
Federal law would permit a state to treat the separation for the period of the quarantine as a temporary layoff. For states taking this approach, individuals may only need to be able and available for that job and, to meet the work search requirement, take reasonable steps to preserve their ability to come back to that job. However, if the individual does not return to the employer after the quarantine ends, the state will need to reassess eligibility.
Scenario 3: Individual is not returning to the employer
An individual is quarantined by a medical professional under government direction or leaves employment due to a reasonable risk of exposure or infection (i.e.; self-quarantine) or to care for a family member and either does not intend to return to the employer or the employer will not allow the individual to return.
Federal law would permit a state law to determine whether the separation here is a quit or a discharge and whether the circumstances are allowable under the state's good cause/just cause provisions. If permitted under the state's good cause/just cause provision, states should consider how they will adjudicate the reasonableness of an individual's separation for reasonable risk of exposure. One such factor could be considering if the individual is in a population that is particularly susceptible to COVID-19.
An individual who leaves work with good cause, however, must still meet all other eligibility requirements to receive benefits, including the able, available, and work search requirements. For example, if state law permits, states may determine that a quarantined individual is still able, available, and seeking work, provided it is work that is suitable for an individual who is quarantined and that limitation does not constitute a withdrawal from the labor market.
Waiting Periods
In most states, an individual who is otherwise eligible for benefits must first serve a waiting period (e.g. not eligible for first week of unemployment). Although it is a longstanding practice, it is not federally required. In order to facilitate an individual's ability to comply with quarantine orders, a state can consider temporarily waiving its waiting period.
Short-Term Compensation Programs
The Short-Time Compensation (STC) program, also known as worksharing, is already in place in 28 states. It helps employers avert layoffs. The program allows employers with a STC plan to reduce the hours of their employees in lieu of layoffs, while permitting these employees to receive payment for partial unemployment. Employees benefit because they do not suffer a complete loss of employment and they are paid STC when their hours are reduced. Employers benefit because they are able to reduce labor costs temporarily while still maintaining their skilled workforce.
In the context of COVID-19, STC can be an important resource for employers whose business temporarily declines. STC provides a safety net to employees with reduced hours while also helping employers retain their workforce. States with an existing STC program can promote its use to avert layoffs where possible. States without a program can enact an STC program.
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