The Relief for Workers Affected by Coronavirus Act (Act), part of the Coronavirus Aid, Relief, and Economic Security Act—known as 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.

Enhanced Benefits for Workers Traditionally Eligible for Unemployment Benefits

Waiting Period Benefits (Section 2105)

Employees who qualify for state unemployment benefits in states with one-week waiting periods will be eligible for their regular state benefits during that waiting week. The employee’s state, however, must enter into an agreement with the Secretary of Labor to provide those benefits, which will be available starting the date on which the agreement is entered into through December 31, 2020.

Emergency Increase Benefits (Section 2104)

Employees 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.

Emergency Increase Benefits will not be available until the date the employee’s state enters into an agreement with the Secretary of Labor to provide these benefits and then will be available through July 31, 2020. Following July 31, an employee would need to exhaust state and federal unemployment benefits (without the extra $600 a week), if the state or federal government provide additional weeks of unemployment benefits beyond that date. After exhausting all state and federal unemployment benefits, employees may become eligible for Pandemic Emergency Unemployment Benefits (described below).

Pandemic Emergency Unemployment Benefits (Section 2107)

Workers who have exhausted state and federal unemployment benefits are eligible for additional unemployment benefits if they are able to work, available to work, and actively seeking work.[1] These generally are the ordinary requirements to receive unemployment benefits and also would apply to the new Pandemic Emergency Unemployment Compensation Benefits.

Eligible employees would receive their regular state unemployment weekly benefit amount, plus an extra $600 per week, for up to 13 weeks. For example, employees in a state providing 26 weeks of state unemployment benefits can exhaust those benefits (supplemented with Emergency Increase Benefits through July 31, 2020), then use 13 weeks of Pandemic Emergency Unemployment Benefits, for a total of 39 weeks.

Employees in a state with fewer than 26 weeks of state unemployment benefits may be eligible to use Expanded Unemployment Benefits to get to 39 weeks of benefits, as described below.

Pandemic Emergency Unemployment Compensation benefits will be available starting the date the employee’s state enters into an agreement with the Secretary of Labor to provide these benefits and through December 31, 2020.

Expanded Benefits for Independent Contractors and Others

Expanded Unemployment Benefits (Section 2102)

Individuals not eligible for state or federal unemployment benefits, including employees with insufficient work history, independent contractors, and the self-employed, may be eligible for up to 39 weeks of Expanded Unemployment Benefits (which may be extended) beginning January 27, 2020, and ending December 31, 2020, if they are out of work because of certain COVID-19 related reasons. The Act directs the Secretary of Labor to enter into agreements with states to provide Expanded Unemployment Benefits, so long as the labor secretary determines those states have adequate systems for administering the benefits through existing state agencies.

For Expanded Unemployment Benefits, individuals must self-certify that they are unemployed, partially employed, or unable to work because of at least one of the following reasons:

• They are diagnosed with COVID-19 or have symptoms of COVID-19 for which they seek a medical diagnosis;
• a member of their household has been diagnosed with COVID-19;
• they are providing care for a family member or household member who has been diagnosed with COVID-19;
• 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;
• 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;
• they cannot reach their place of employment because a health care provider has told them to self-quarantine due to concerns related to COVID-19;
• 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;
• 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;
• they had to quit their job as a direct result of COVID-19;
• their place of employment is closed as a direct result of the COVID-19 public health emergency; or
• the individual meets any additional criteria established by the Secretary of Labor.

Individuals who have the ability to telework with pay or who are receiving paid sick leave or other paid leave benefits are not eligible for Expanded Unemployment Benefits.

For the self-employed and others who would not qualify for state unemployment benefits (e.g., independent contractors), the weekly benefit amounts are those available under a regulation providing the calculation for federal disaster unemployment benefits amounts (20 CFR § 626.6), which may vary by state, plus $600 per week.

For regular employees, the weekly benefit amounts are their respective state unemployment benefits (if they were eligible) plus $600 per week.

Presumably, employees with no waiting periods who are eligible for 26 weeks of state unemployment benefits (supplemented by Emergency Increase Benefits) and 13 weeks of Pandemic Emergency Unemployment Compensation (39 weeks total) will not be eligible for the Expanded Unemployment Benefits. The 39-week limitation of Expanded Unemployment Benefits is reduced by the weeks that the individual received other state or federal unemployment benefits.

But, for example, employees in a state with 21 weeks of state unemployment benefits (as opposed to 26) can exhaust those benefits (supplemented with Emergency Increase Benefits through July 31, 2020), then use 13 weeks of Pandemic Emergency Unemployment Benefits, and then may be eligible for 5 weeks of Expanded Unemployment Benefits.

Short-Time Compensation Programs

Temporary Financing of Short-Time Compensation Programs in States with Programs in State 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. 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. Employers who choose to enter into short-time compensation agreements with these states must pay half of the costs of those benefits. States are then entitled to reimbursement from the federal government for the state’s half.

Key Takeaways for Employers

• For states that enter into agreements with the Secretary of Labor to provide benefits, the federal government will reimburse 100% of their extra benefits costs (that is, those costs above what they would have paid in regular state unemployment benefits), plus administrative expenses. Accordingly, we expect most, if not all, states to participate, but the timing of these state agreements is not immediately clear. And the US Department of Labor (DOL) has not yet issued guidance to states on how to enter into these agreements. Perhaps more importantly, employers will not bear these extra costs.
• In some situations, employees who receive the extra $600 a week payment will be entitled to more compensation than they would otherwise be entitled to if they remained employed. However, we do not expect employees to be able to simply quit because they think it will make sense for them financially to do so and then collect unemployment benefits. For an employee to be eligible for Expanded Unemployment Benefits, for example, covered individuals must have “had to quit their job as a direct result of COVID-19,” which suggests they must have essentially been forced to quit for reasons directly related to COVID-19.
• While not explicitly stated in the Act, it appears that employees receiving only partial state unemployment benefits (e.g., reduced pay but still employed) could still receive the additional $600 payments (Emergency Increase Benefits) on top of their partial state unemployment benefits. The DOL may issue guidance to clarify this point.

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.