Expansion of Unemployment Benefits in the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act” was signed into law on March 27, 2020 and provides $2 trillion in funds available in response to the COVID-19 pandemic. Included in the CARES Act, the “Relief for Workers Affected by Coronavirus Act” provides an estimated $260 billion in enhanced and expanded unemployment insurance (UI) to workers because of the COVID-19 pandemic and the public response to it.

The provisions in this Act set out a multipronged approach to assist state-based unemployment programs in three ways: (1) provide a federal supplement to state-paid unemployment compensation; (2) expand who is eligible for unemployment compensation; and (3) extend unemployment compensation beyond the time normally provided by state law.

First, from the date the bill was signed through July 31, 2020, all regular UI and Pandemic Unemployment Assistance (discussed below) claimants will receive their usual calculated benefit plus an additional $600 per week in compensation referred to as the “Federal Pandemic Unemployment Compensation.” The Federal Pandemic Unemployment Compensation is a flat amount to those receiving regular UI and those receiving benefits under the new Pandemic Unemployment Assistance program. This supplement will be paid to the individual by the State either with the regular UI payment or at a separate time, but on a weekly basis.

Second, the “Pandemic Unemployment Assistance Program” matches the regular state unemployment benefit amount plus the Federal Unemployment Compensation ($600) for unemployed workers who would not normally be eligible for unemployment compensation. Benefits under the Pandemic Unemployment Assistance Program are provided for up to 39 weeks (which includes any weeks the individual received regular compensation or extended benefits under any Federal or State law). This program runs from January 27, 2020 through December 31, 2020, unless otherwise extended. Individuals will be eligible for benefits retroactively.

Those eligible under the Pandemic Unemployment Assistance Program include self-employed workers and independent contractors, freelancers, workers seeking part-time work, and workers who do not have a long enough work history to qualify for the regular state UI benefit. Workers must be authorized to work to be eligible, meaning that undocumented workers will not qualify.

More specifically, under thisnew program, a “covered individual” is an individual who

• is not eligible for regular compensation or extended benefits under the State or Federal Law, or for “Pandemic Emergency Unemployment Compensation (described below), including an individual who has exhausted all right to regular unemployment or extended benefits under the State or Federal Law or Pandemic Emergency Unemployment Compensation or is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular benefits under the State or Federal Law or Pandemic Emergency Unemployment Compensation, and
• provides self-certification that he or she:
  • is otherwise able to work and available for work within the meaning of the applicable state law, but is unemployed, partially unemployed, or unable or unavailable to work because:
    • he or she has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 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 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 had to quit his or her job as a direct result of COVID-19;
    • the individual’s place of employment is closed as a direct result of the COVID-19 public health emergency; or
    • the individual meets any additional criteria established by the Secretary for unemployment assistance.

As written, the law provided no language specifying the necessary conditions of a valid self-certification and does not provide the oversight to ensure consistency and compliance.

An individual is not a “covered individual” if he or she has the ability to telework with pay or is receiving paid sick leave or other paid leave benefits.

Third, the Pandemic Emergency Unemployment Compensation Program provides an additional 13 weeks of unemployment benefits through December 31, 2020 to help those who remain unemployed after State unemployment benefits are no longer available. The weekly amount of unemployment benefits available to the individual is the amount payable to the individual under State law plus the Federal Pandemic Unemployment Compensation ($600).

The individual must be “actively seeking work,” but states must be flexible where individuals are unable to search for work because of COVID-19, including because of illness, quarantine, or movement restrictions. Louisiana has already waived work search requirements.

Other Provisions:

• Temporary Full Federal Funding of the First Week of Compensable Regular Unemployment for State with No Waiting Week

Under this provision, states will be reimbursed the full amount of the total compensation paid to individuals by the State for their first week of regular unemployment if the State does not require a one-week waiting period for unemployment benefits through December 31, 2020. Louisiana has waived the week of waiting.

• Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations

The CARES Act includes a specific provision allowing governmental entities and nonprofit organizations to be reimbursed for half of the costs incurred through December 31, 2020 to pay unemployment benefits, including self-funded unemployment benefits.

• Fraud Provisions

The Act provides that “if any individual knowingly made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed or caused another to fail, to disclose a material fact, and as a result of such false statement or representation” an individual has received any amount under the Relief for Workers Affected by Coronavirus Act or to which he or she is not entitled, the individual shall be ineligible for further benefits under the Relief for Workers Affected by Coronavirus Act, shall be subject to prosecution, and be required to repay amounts of Federal Pandemic Unemployment Compensation to the state agency.

• Individual states must “opt-in” to these programs via agreement with the Secretary of Labor. Louisiana has already opted-in. For states that enter into agreements with the Secretary of Labor to provide benefits, the federal government will reimburse 100% of their extra benefit costs (that is, those costs above what they would have paid in regular state unemployment benefits, plus administrative expenses.) Employers will not bear these extra costs.
• One of the major concerns is that the structure of these programs provides compensation in excess of prior wages in some cases and, therefore, may incentivize employees to quit or remain out of the workforce while the Federal Pandemic Unemployment Compensation is available until July 31, 2020. It is unclear if employees can simply quit because they think it would make more financial sense for them to do so and collect unemployment benefits. For example, for an employee to be eligible for Expanded Unemployment Benefits, covered individuals must have “had to quit their job as a direct result of COVID-19.” This suggests that the individual must essentially have been forced to quit for reasons directly related to COVID-19.
• Under Louisiana law, partial unemployment benefits are available to individuals whose hours have been reduced. The CARES Act, as written, appears to provide the Federal Pandemic Unemployment Compensation ($600) to such individuals receiving only partial state unemployment benefits, and the Department of Labor has stated in its guidance that an individual who is eligible to receive at least $1 of underlying benefits for the claimed week will received the full $600 Federal Pandemic Unemployment Compensation.
• There is no provision in the Act that an individual must use any available paid leave prior to filing a claim for unemployment benefits. However, under Louisiana law, an individual is disqualified for unemployment benefits if the individual is receiving or has received remuneration for “vacation pay” for the week(s) covered by that remuneration. (La. R.S. 23:1607(7)(d).) The Act does not appear to change this state law provision.