The U.S. Department of Labor (DOL) recently published three Unemployment Insurance Program Letters (UIPLs) offering guidance on the administration of separate sections of the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act,” that provide for expanded unemployment insurance benefits. While the UIPLs are directed to state agencies, the UIPLs contain helpful information for employers.
UIPL 15-20 provides guidance on the administration of section 2104 of the CARES Act, which authorizes Federal Pandemic Unemployment Compensation (FPUC) benefits. This section allows eligible individuals to receive a flat $600 per week, in addition to regular weekly unemployment benefits amounts they are otherwise eligible to receive, through July 31, 2020. Individuals who receive unemployment compensation from the following sources are entitled to the additional FPUC payment: (i) state programs, (ii) the Pandemic Emergency Unemployment Compensation (PEUC) program, [1] (iii) the Pandemic Unemployment Assistance (PUA) program, [2] (iv) Extended Benefits (EB), [3] (iv) the Short-Time Compensation (STC) program, [4] (v) Trade Readjustment Allowances (TRAs), [5] (vi) the Disaster Unemployment Assistance (DUA) program, [6] and (vii) payments under the Self-Employment Assistance (SEA) program. [7]
UIPL 15-20 clarifies that an individual receiving at least a nominal amount of regular unemployment compensation (at least $1) for a given week will also be eligible to receive the $600 payment. This means, for example, that an individual who works reduced hours and receives partial unemployment benefits under a state program is entitled to the full $600 weekly FPUC benefit.
UIPL 15-20 addresses the scenario where employees work reduced schedules and earn reduced wages, but, because their reduced wages are still above the state’s maximum benefit level, are ineligible to receive partial unemployment insurance benefits. As a result of this ineligibility, they are also ineligible for the weekly $600 FPUC benefit. In such cases, it would actually be more beneficial for the employee not to work at all, so that he or she may receive unemployment benefits as well as the FPUC benefit. One way that employers can ensure that their reduced-hour employees remain eligible for the FPUC benefit is to ensure that the reduced schedule and accompanying reduced compensation rate brings the employee’s weekly wages to less than the state’s maximum weekly benefit amount for any given week, thus allowing them to collect at least $1 of unemployment insurance. Alternatively, an employer may engage in its state’s short-time compensation program (also known as shared-work or work share programs), under which an employee can receive partial wages and partial regular unemployment benefits—thereby preserving the employee’s eligibility for the $600 FPUC benefit.
UIPL 16-20 contains guidance about section 2102 of the CARES Act, which creates the PUA program. PUA expands unemployment benefit coverage to certain workers who are usually not eligible for unemployment benefits under state law, including those who:
- are self-employed (including independent contractors and gig economy workers);
- are seeking part-time employment;
- are lacking sufficient work history;
- otherwise do not qualify for regular unemployment compensation under state or federal law, or PEUC; and
- have exhausted their unemployment benefits under state or federal law or PEUC.
Until December 31, 2020, PUA provides up to 39 weeks of unemployment benefits for qualifying individuals who are otherwise able to work and available to work, but are unemployed, partially unemployed, or unable to work due to one of the following 10 reasons:
- 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 his or her 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, together with a subsequent April 17, 2020, letter from the DOL to Senator Ron Wyden, describes in further detail the parameters of these eligibility standards. For example, with respect to the seventh criterion (an individual who was scheduled to commence employment but does not have a job as a direct result of the COVID-19 emergency), UIPL 16-20 explains that this includes an individual who does not have a job “because the employer with whom the individual was scheduled to commence employment has rescinded the job offer as a direct result of the COVID-19 public health emergency.” Similarly, a person who had a bona fide offer to start working on a specific date, but was unable to start because of a COVID-19- related reason, would be covered. And with respect to the ninth criterion (an individual who quits his or her job), UIPL 16-20 explains that this includes an individual who “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 explains that independent contractors who have had to suspend or severely limit their customary work activities as a direct result of the COVID-19 public health emergency may be eligible for PUA benefits, even if they do not squarely fit into the criteria outlined above. UIPL 16-20 gives 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.
The DOL’s April 17th letter further clarifies that independent contractors who are partially employed—including those who “experience[] a significant diminution of work as a direct result of COVID-19”—are eligible for PUA.
PUA benefits generally are not available to individuals who have the ability to telework with pay, or who are receiving paid leave benefits. However, an individual who is receiving paid leave benefits for less than his or her customary workweek, or is teleworking with pay for fewer hours than the individual worked prior to the COVID-19 pandemic, may still be eligible for a reduced PUA weekly benefit amount.
Individuals receiving PUA benefits may also receive the $600 weekly FPUC benefit.
UIPL 17-20 provides guidance on the administration of section 2107 of the CARES Act, which creates the PEUC program. PEUC provides up to 13 additional weeks of unemployment benefits to eligible individuals who have exhausted their benefits under state or federal law. This extension is available through December 31, 2020.
To be eligible, individuals must (i) have exhausted all rights to unemployment compensation under state or federal law with respect to a benefit year ending on or after July 1, 2019; (ii) have no rights to unemployment compensation under state or federal law; (iii) not be receiving unemployment compensation benefits under Canadian law; and (iv) be able to work, available to work, and actively seeking work. The fourth criterion of “actively seeking work” is meant to be applied with “flexibility” in case individuals cannot look for work due to the COVID-19 pandemic (e.g., illness, quarantine, or movement restriction).
UIPL 17-20 clarifies that PEUC benefits are available to individuals who are totally unemployed and who are partially employed and receive partial unemployment benefits. In both cases, until July 31, 2020, the PEUC benefit is equal to (i) the amount payable under state unemployment compensation law, and (i) the weekly $600 FPUC amount. After FPUC payments end on July 31, 2020, the PEUC benefit will be equal to the amount payable under state unemployment compensation law.
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[1] The PEUC program is described in greater detail below.
[2] The PUA program is described in greater detail below.
[3] EB refers to compensation provided pursuant to the Federal-State Extended Unemployment Compensation Act of 1970.
[4] STC is a program within the federal-state unemployment insurance system, where workers whose hours are reduced under a formal work sharing plan may be compensated with an unemployment benefit that has been pro-rated for partial work reduction.
[5] TRAs are income support payments to individuals who have exhausted unemployment compensation and whose jobs were affected by foreign imports as determined by a certification of group coverage issued by the Department of Labor.
[6] The DUA program provides unemployment benefits to individuals who have become unemployed as a direct result of a presidentially declared major disaster.
[7] The SEA program offers dislocated workers the opportunity for early re-employment. The program is designed to encourage and enable unemployed workers to create their own jobs by starting their own small businesses. Under this program, states can pay a SEA allowance instead of regular unemployment insurance benefits. SEA allowances are the same weekly amounts as the worker's regular unemployment insurance benefits.