NOTE: Because the COVID-19 situation is dynamic, with new governmental measures each day, employers should consult with counsel for the latest developments and updated guidance on this topic.
On Sunday April 5, 2020, the U.S. Department of Labor (DOL) issued Unemployment Insurance Program Letter (UIPL) 16-20 to provide further guidance on Section 2102 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. Section 2102 creates the Pandemic Unemployment Assistance (PUA) program. PUA is a temporary federal program that provides up to 39 weeks of unemployment benefits for individuals impacted by the pandemic, and provides funding to states for the administration of the program. Individuals receiving PUA benefits may also receive the $600 weekly benefit amount (WBA) under the Federal Pandemic Unemployment Compensation (FPUC) program. Guidance on the FPUC program, which provides the $600 flat payment through July 31, 2020 to individuals who are otherwise entitled to receive regular unemployment compensation, was issued on April 4, 2020.
The PUA program provides benefits to those individuals who are not eligible for regular unemployment compensation, including those who have exhausted all rights to such benefits. Eligible individuals also includes those who are self-employed, those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits under state or federal law.
Who is Covered under PUA?
UIPL 16-20 provides guidance on “covered employees,” explaining, for example, that an individual “lacking sufficient work history” means an individual (1) with a recent attachment to the labor force (2) who does not have sufficient wages in covered employment during the last 18 months to establish a claim under regular unemployment compensation, and (3) who became unemployed or partially unemployed because of one of the COVID-19-related reasons identified under Section 2102.
The reasons for obtaining PUA benefits are limited to 10 enumerated categories of eligibility:
- The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- A member of the individual’s household has been diagnosed with COVID-19;
- The individual is providing care for a family member or a member of the individual’s household who has been diagnosed with COVID-19;
- A child or other person in the household for which the individual has 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 such school or facility care is required for the individual to work;
- The individual is unable to reach the 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 the place of employment because the individual has been advised by a health care 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 the 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 their job as 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.
UIPL 16-20 provides specific guidance on the parameters of such eligibility standards. For instance, with respect to the ninth criteria (employees have to quit their job as a direct result of COVID-19), the guidance provides an example: “An individual was diagnosed with COVID-19 by a qualified medical professional, and although the individual no longer has COVID-19, the illness caused health complications that render the individual objectively unable to perform his or her essential job functions, with or without a reasonable accommodation.”
The guidance also discusses the two specific exclusions from PUA: (1) employees have the right to telework with pay, or (2) employees have a right to paid leave benefits, even if they are otherwise eligible for PUA. UIPL 16-20 notes, “the state must determine whether the claimant has been offered the option of continuing to work for pay by teleworking. If so, and claimants were offered to continue to work the same number of hours, claimants are not eligible for PUA.”
While states have been provided some flexibility under the CARES Act to interpret the eligibility criteria, this leeway is generally limited to dealing with the effects of COVID-19. States must still ensure that individuals only receive these emergency benefits if they are entitled to them under the law. To that end, UIPL 16-20 specifically notes that “quitting work without good cause to obtain UI benefits is fraud under PUA” and may result in disqualification for benefits and obligations to repay improperly received benefits. In stressing that only those eligible for PUA benefits should receive them, the DOL emphasized:
States should bear in mind that many of the qualifying circumstances described in section 2102(a)(3)(A)(ii)(I) are likely to be of short term duration. For example, an individual who has been advised to self-quarantine by a health care provider because of the individual’s exposure to a person who has tested positive for the coronavirus, and is therefore unable to reach his or her place of employment for purposes of 2102(a)(3)(A)(ii)(I)(ff), may be able to return to his or her place of employment within two weeks of the exposure if he or she has not exhibited symptoms of COVID-19 or tested positive for the coronavirus. Similarly, a school is not closed as a direct result of the COVID-19 public health emergency, for purposes of 2102(a)(3)(A)(ii)(I)(dd), after the date the school year was originally scheduled to end. As such, the expectation is that states will continue to apply their able, available, and actively seeking work standards as outlined in state law.
As noted, states will have to make determinations about specific rights to benefits. Some states may simply make administrative decisions on a claim-by-claim basis, while others may provide specific published guidance. For example, the Connecticut Department of Labor issued FAQs before UIPL 16-20 came out. One FAQ reads:
I received an offer to return to work, but I am concerned about the safety of the position in light of COVID-19. Will I be denied unemployment for that week?
Unemployment benefits are paid on a week to week basis. If the Governor’s restrictions are still in place regarding essential and nonessential employment, or you have concerns regarding your specific place of employment, you may have good cause to refuse your employment as it is not suitable due to possible exposure to the COVID-19 virus, and would not be denied benefits on that basis.
Whether Connecticut’s guidance is consistent with UIPL 16-20 is debatable, but again states will have some rights to make those determinations. Employers will need to be vigilant in determining whether claims are truly for valid COVID-19 reasons and contest claims they believe are fraudulent.
Guidance on independent contractors
The guidance also addresses how states should address independent contractors, noting that “an independent contractor with reportable income may also qualify for PUA benefits if he or she is unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited his or her ability to continue performing his or her customary work activities, and has thereby forced the individual to suspend such activities.” It then provides the following example:
[A] driver for a ridesharing service who receives an IRS Form 1099 from the ride sharing service may not be eligible for PUA benefits under the other criteria outlined above, because such an individual does not have a “place of employment,” and thus cannot claim that he or she is unable to work because his or her place of employment has closed. However, under the additional eligibility criterion established by the Secretary here, the driver may still qualify for PUA benefits if he or she has been forced to suspend operations as a direct result of the COVID19 public health emergency, such as if an emergency state or municipal order restricting movement makes continued operations unsustainable.
Concerns have been expressed that this may be an unworkable standard, or unfairly limit independent contractors’ ability to claim benefits. For example, even if a state or municipal order restricting movement is lifted, a driver may still find that demand for services is substantially reduced for a period of time. Under the guidance, it is not clear what a state would do with continuing claims in the face of such a fact pattern, but it is anticipated that states will broadly construe eligibility to ensure receipt of benefits.