The CARES Act made significant changes to unemployment benefits in response to the COVID pandemic. As we explained in our March 31, 2020 update, this included expanding unemployment benefits to those who were not previously eligible (e.g. self-employed individuals or employees of religious schools), extending benefits for 13 additional weeks, and eliminating the one-week waiting period. These changes will be implemented through agreements between the federal government and each state who wishes to participate in these new programs. After the CARES Act was signed into law, we received several questions from employers who were trying to figure out how these changes might impact them and any of their employees who would be furloughed or terminated for COVID-related reasons. The most-discussed part of the CARES Act was the provision stating that an individual receiving unemployment benefits would also receive $600 of Federal Pandemic Unemployment Compensation (FPUC) on a weekly basis through July 31, 2020. Although the CARES Act stated that such payments would be made by state governments, and then reimbursed by the federal government, the Act did not address all details of how the $600 would be implemented. On April 4, 2020, the U.S. Department of Labor attempted to provide more clarity on these issues by releasing Unemployment Insurance Program Letter No. 15-20. As that letter notes, it is intended to provide “states with operating, financial, and reporting instructions for the FPUC program.” After reading over that Program Letter, we believe there are ten key facts for employers regarding the weekly $600 payments:
- The Program Letter reiterated that individuals are only entitled to benefits, including the weekly $600 payment, if they are “no longer working through no fault of their own” and if they are “able and available to work.”
- The weekly $600 payment is available to any claimant receiving benefits, whether those are regular unemployment compensation benefits under state law or new benefits created by the CARES Act.
- The weekly $600 payment is available to any claimant who is receiving benefits through Connecticut’s Shared Work program based on a reduction in their hours.
- The $600 is not prorated based on an individual’s benefit rate. Instead, if a claimant receives “at least one dollar ($1) of underlying benefits for the claimed week, the claimant will receive the full $600 FPUC.”
- Eligibility for the $600 will be based entirely on the claimant’s eligibility for underlying benefits. No separate decision needs to be made by the state, and there is no separate application process or separate appeal process from the denial of FPUC benefits.
- The state cannot reduce a claimant’s benefits to account for the receipt of this extra $600 weekly payment.
- An employee can receive weekly $600 payments between March 27, 2020, and July 31, 2020. A claimant can receive these benefits after their state completes an agreement with the federal government. If payments cannot begin immediately, a state must pay them retroactively.
- The $600 is taxable, and other obligations can be withheld from that payment (e.g. child support obligations).
- A state may not charge any employer for the $600 FPUC payments so as to impact the employer’s experience rating.
- The Office of the Inspector General from the U.S. DOL will be auditing state reports, and any individual who fraudulently receives such benefits will be subject to penalties and repayment.
As this Program Letter makes clear, all individuals receiving benefits will receive the extra $600 FPUC payment on a weekly basis through July 31, 2020, or until their unemployment or underemployment ends. As a result, some individuals may make the same or even more than they earned through their employment. This extra money will be paid directly by the federal government, however, not states or employers.
At this time, the Connecticut Department of Labor’s website indicates that it is still analyzing the CARES Act and that “at this time we have no additional information regarding the timeframe within which we will implement these federal programs, but will update this website and FAQs as soon as we have new information.” Therefore, please continue to monitor employmentlawletter.com for updates on any guidance issued by the DOL, and for updates on other COVID-related issues impacting employers. Additional information may also be found at our firm’s COVID-19 Resource Center, where we have gathered all of the guidance issued by our firm and organized it by industry and topic. If you have specific questions regarding this guidance, please contact Peter Murphy.