On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), an economic stimulus package providing over $2 trillion to aid Americans affected by the COVID-19 pandemic. Along with direct payments to eligible adults, tax and loan relief for businesses, and funding for health care workers, the law provides increased unemployment benefits to individuals who are out of work due to the public health crisis.
How does the CARES Act change unemployment benefits for those who are already eligible?
First, under what the law calls “Federal Pandemic Unemployment Compensation,” all individuals currently receiving state unemployment benefits will receive an additional $600 per week in federal funds through July 31, 2020. This is a substantial increase, enabling some low- and moderate-income individuals to earn more through unemployment than they would while working.
Second, an individual who has already exhausted their state unemployment benefits is eligible to receive an additional 13 weeks of “Pandemic Emergency Unemployment Compensation” through the end of December 2020. This means an individual may receive unemployment benefits for 39 weeks rather than the 26 weeks provided by most states. During these 13 weeks, the recipient is eligible for their regular benefit amount under state law plus – until July 31, 2020 -- an additional $600 per week. In order for individuals who previously exhausted their unemployment benefits to qualify for additional unemployment (including the $600 supplement for the next four months), they must be otherwise eligible for benefits under state law, meaning they are able to work, available to work, and actively seeking work.
Finally, to encourage states to waive the customary 7-day waiting period to receive benefits, the federal government will reimburse states for the full amount of unemployment benefits paid to individuals during their first week of unemployment.
What about those who ordinarily would not be eligible for unemployment?
The CARES Act creates a temporary “Pandemic Unemployment Assistance” program funded by the federal government. Under this provision, individuals who would not typically be eligible for unemployment—including independent contractors and people with limited work histories—may qualify for benefits if they are out of work due to the COVID-19 outbreak. Benefits under this provision are available for up to 39 weeks, and the law will also apply retroactively, so recipients will be eligible for benefits if they missed work due to COVID-19 for any 39-week period between January 27, 2020 and December 31, 2020. The weekly benefit amount is equal to the amount the covered individual would otherwise receive under a state’s unemployment program, plus an additional $600.
An individual is covered under the Pandemic Unemployment Assistance provision if they self-certify that they are ready and available to work but are unemployed or partially unemployed for one of the following reasons:
- The individual has been diagnosed with COVID-19 or is experiencing COVID-19 symptoms and 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 who has been diagnosed with COVID-19;
- The individual is the primary caregiver for a child who is unable to attend school or a daycare facility that has closed as a direct result of COVID-19;
- The individual is under quarantine imposed as a direct result of COVID-19;
- The individual was scheduled to begin employment and does not have a job or is unable to reach the job as a direct result of COVID-19;
- The individual has become the breadwinner for a household because the head of 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 COVID-19.
As discussed below, further guidance (which was authorized by the CARES Act) is needed to ascertain exactly how much the pool of those ultimately eligible for unemployment benefits will expand. (For example, such guidance will be instrumental in determining what it means for an individual to have to “quit their job as a direct result of COVID-19.”) The Act is clear, however, that workers will not qualify for Pandemic Unemployment Assistance if they are able to telework or are already receiving paid leave benefits from their employers. However, unlike the Federal Pandemic Employment Provision mentioned above, there is no requirement that a recipient be actively seeking work to qualify for Pandemic Unemployment Assistance.
Does the CARES Act affect state work share programs?
Yes, under the CARES Act, the federal government will reimburse states 100% of the funds paid to employees who are working reduced hours in accordance with a state authorized short-term compensation or work share program. Under these state programs, employees are eligible for partial unemployment benefits when employers implement hours reductions rather than layoffs. Typically, an employee would be eligible for the pro-rated amount of benefits to which they would be entitled if they were fully unemployed (e.g., if an employee’s hours are reduced by 30%, they would be entitled to 30% of the applicable unemployment benefit in addition to their reduced salary). For the rest of the calendar year, the federal government will reimburse states for any payments made pursuant to such a program.
Does the CARES Act provide benefits for charities that have opted out of State unemployment insurance?
Yes, the Act provides for additional funds to be transferred to states from the federal unemployment account to be used solely to reimburse Section 501(c)(3) organizations, government agencies, and Indian tribes that have opted out of the State unemployment system. Those entities will be reimbursed for 50% of the amount paid for unemployment benefits between March 13, 2020 and December 31, 2020.
What role will state unemployment offices play?
The CARES Act is funded with federal money, but the benefits will still be administered by state unemployment offices after entering into agreements with the Department of Labor. States currently are taking different approaches, with some beginning to administer benefits under the new law and some awaiting guidance from DOL. Ultimately, states may have some discretion in determining which claimants are eligible for benefits and the amount to which they are entitled. For instance, as discussed earlier, it is not clear what it means for an employee to quit as a result of COVID-19. According to congressional aides, the provision wasn’t intended to cover people who quit (or want to quit) because of a general fear of contracting COVID-19, but at this point there is no official guidance. Additionally, for those applying for partial unemployment benefits other than through a state-approved work sharing program, it is unclear how the $600 per week supplement will be incorporated into determining an individual’s eligibility for partial unemployment benefits (and how much they may receive). State unemployment offices will need to make these determinations, as well as others, absent sufficient clarifying federal guidance.