Iowa Ends Participation in Federal Unemployment Benefit Programs

Dentons Davis Brown
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Dentons Davis Brown

Governor Reynolds announced effective June 12 the state of Iowa will stop participation in several federal pandemic-related unemployment benefit programs. Iowa will continue to pay regular unemployment, without the additional federal benefits.

In addition, Governor Reynolds said Iowa will no longer waive employer charges.

Iowa will no longer participate or issue payments to claimants from the following federal programs after June 12, 2021.  

  • Pandemic Emergency Unemployment Compensation (PEUC) - Benefits beyond the traditional 26 weeks.
  • Federal Pandemic Unemployment Compensation (FPUC) - Supplemental $300 weekly payments to all Iowans receiving unemployment benefits regardless of the program under which they are being paid.
  • Pandemic Unemployment Assistance (PUA) - Benefits for the self-employed, the underemployed, independent contractors, and individuals who have been unable to work due to health or COVID-19-related reasons.
  • Mixed Earner Unemployment Compensation (MEUC) - Supplemental payments for individuals who had both traditional W-2 income as well as self-employment income.

What this means for employers

This may mean increased recruiting opportunities as benefits become more restricted.  However, this will have to be balanced with return to work safety issues and new guidance on vaccinations, masking, and social distancing.  For some, it can be hard to onboard remotely and remote work requests will still need to be assessed independently.  Additionally, although we are seeing downward trends in COVID-19 cases in Iowa, it hasn’t disappeared.  Therefore, you may continue to have employees who will have bona fide need for COVID-related leave. 

Once the leave benefits under the FFCRA became permissive, many employers stopped offering leave of this type.  That may become a consideration as Iowa ends the “no harm no foul” approach to COVID unemployment leave benefits where employer accounts were not charged.  Offering leave under the FFCRA could give some employers more flexibility to avoid increases in unemployment claims. It remains unclear whether FFCRA leave can be restarted if you discontinued it earlier. One question of particular concern is whether employees could claim they were shorted on benefits when the program was discontinued. 

Employers should coordinate with your employment counsel on issues of this type.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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