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What Employees Should Know: Expanded Pandemic Unemployment Benefits During the COVID-19 Health Emergency

Posted on in BGL Law

What Employees Should Know

A.  Introduction

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), was passed by Congress and signed into law. 

The CARES Act is the largest economic bill in U.S. History, calling for nearly $2 trillion in spending, in part as an economic stimulus package to benefit small businesses and individuals.

Leaving aside provisions within the CARES to assist businesses, the CARES Act also provides relief to individuals through various programs, including:

1).        unemployment assistance;

2).        tax rebates;

3).        access to distributions from certain defined contribution plans, such as 401(k) plans, 403(b) plans and profit sharing plans, without penalty;

4).        student loan deferment;

5).        mortgage forbearance; and

6).        relief to certain qualified tenants by way of a moratorium on actions for rent. 

For unemployment assistance, CARES makes an estimated $260 billion available to the millions of U.S. workers finding themselves furloughed, laid off or otherwise without work due to the COVID-19 protocols being implemented on federal, State and local levels throughout the Country.

The attorneys at Botto Gilbert Lancaster, LLC, are experienced in all aspects of both residential and commercial landlord/tenant transactions and litigation.

For further information, or legal and practical guidance, on landlord/tenant issues, or for other questions relating to the various State and federal laws created to address the COVID-19 health emergency, contact Botto Gilbert Lancaster, PC, at (815) 338-3838, or by email.  

B.      Expanded Pandemic Unemployment Benefits

1.         An overview of the three new unemployment insurance programs provided by the CARES Act: (1) Pandemic Unemployment Assistance; (2) Pandemic Unemployment Compensation; and (3) Pandemic Emergency Unemployment Compensation

There are three new unemployment insurance (“UI”) programs federally funded through the CARES Act: (1) Pandemic Unemployment Assistance; (2) Pandemic Unemployment Compensation; and (3) Pandemic Emergency Unemployment Compensation. 

Before examining the contours of the three expanded pandemic unemployment programs, it is important to bear in mind that they are designed to supplement such State programs. 

Since the three pandemic unemployment relief programs are interconnected to essentially ensure unemployment coverage for workers through December 31, 2020, it may be worthwhile to place the federal programs in context with the State UI programs. 

All but eight States provide 26 weeks (or approximately six months, ending roughly September 2020 counting off from March) of regular UI benefits, the exceptions being Arkansas, Alabama, Florida, Idaho, Kansas, Missouri, North Carolina, and South Carolina.

There are really only two categories of unemployment protection under the CARES Act:

PUA for workers without access to regular State unemployment insurance, generally including self-employed persons, workers without a requisite work history, and those having exhausted their State and federal benefits:

The first category of unemployment protection is for workers without access to regular State unemployment insurance, generally including self-employed persons, workers without a requisite work history, and those having exhausted their State and federal benefits.

This category is managed via the Pandemic Unemployment Assistance (“PUA”) program, currently targeted to expire on December 31, 2020.

PUC and PEUC for UI-eligible workers, including an additional 13 weeks (or roughly three months) of (PEUC) unemployment benefits for those who exhaust such benefit rights on or after July 1, 2020:

The second category of CARES Act unemployment protection is for UI-eligible employees, managed pursuant to Pandemic Unemployment Compensation (“PUC”),  and set to expire on July 31, 2020 (again, unless otherwise extended), and then through Pandemic Emergency Unemployment Compensation (“PEUC”), affording an additional 13 weeks (or roughly three months) of unemployment benefits for those who exhaust such benefit rights on or after July 1, 2020.

The Act is clear that UI-eligible workers who exhaust their PEUC benefits by around October 2020, in the three months or so immediately following the July 31, 2020, sunset for PUC, would become eligible for PUA as employees who had exhausted their State and federal benefits, so that the Act generally provides additional unemployment protection for both UI-eligible employees and certain classes of workers not ordinarily covered by UI through December 31, 2020, and possibly beyond for employees who are PEUC-eligible sufficiently late in 2020.

Of course, all of this suggests a governmental optimism of a return to normalcy by around December 31, 2020.

PUC, PEUC and PUA programs are fully federally funded. States will also receive additional administrative funds to operate these programs.  However, there is a “non-reduction rule” in the CARES Act, which means that as long as the States are participating in these programs, they may not do anything to decrease the maximum number of weeks of UI or the weekly benefits available under state law as of January 1, 2020.

2.         An outline of the three new unemployment insurance programs provided by the CARES Act: (1) Pandemic Unemployment Assistance; (2) Pandemic Unemployment Compensation; and (3) Pandemic Emergency Unemployment Compensation

a).        Pandemic Unemployment Assistance (“PUA”) provides for workers without access to regular State UI, generally including self-employed persons, workers without adequate work history, and those who have exhausted their State and federal UI benefits

i).         Eligible workers                

Pandemic Unemployment Assistance (“PUA”) provides emergency unemployment assistance to workers who cannot access regular state UI, including:

Self-employed individuals, such as independent contractors, freelance workers, and those seeking part-time work;

Workers without a sufficiently lengthy work history; and

Those “not eligible for regular compensation or extended benefits under State or Federal law or pandemic emergency unemployment compensation under [Act] section 2107, including an individual who has exhausted all rights to regular compensation or extended benefits under State or Federal law or pandemic emergency unemployment compensation,” essentially a catch-all for employees having exhausted their benefits under PUC through July 31, 2020, and also their additional 13 weeks (or approximately three months) of PEUC benefits.

ii).        Benefits

PUA benefits equal: the weekly benefit amount determined by each State; plus the additional $600.00 weekly Federal Pandemic Unemployment Compensation amount set forth by CARES Act Section 2104.

iii).       Duration

PUA benefits are currently available for up to 39 weeks (or approximately nine months) (§2102(c)).

The program will expire on December 31, 2020, unless otherwise extended. 

iv).       Certification requirements

Applicants must generally certify that they are otherwise able to work and available to work, except the individual is unemployed, partially unemployed, or unable or unavailable to work because of:

being diagnosed with COVID-19 or having a household member diagnosed with COVID-19;

being subject to a quarantine of self-quarantine;

“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;”

having to care for school-age children because of the unavailability of child care;

having to quit as a direct result of COVID-19;

closure of place of employment; or

any additional criteria established by the Secretary of Labor.

Department of Labor guidelines suggest that the “additional criteria” for PUA assistance applies to “an individual who works as an independent contractor with reportable income… if he or she is unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited his or her ability to continue performing his or her customary work activities.”

All of the foregoing raises some remaining ambiguity insofar as certain ‘covered individuals’ may still not be able to certify that they were ‘scheduled to commence employment but do not have a job as a direct result of the COVID-19 public health emergency,’ or that they ‘had to quit as a direct result of COVID-19,’ where the job loss resulted from being furloughed, laid off or terminated by business entities that have reduced force but not closed.

iv).       Ineligibility

PUA benefits are not available to the following classes of employees:

Those eligible for State UI;

Individuals who can perform telework; and

Those receiving paid sick leave or other paid leave.

b).        Pandemic Unemployment Compensation (“PUC”), and Pandemic Emergency Unemployment Compensation (“PEUC”) provide additional UI benefits, in both amount and duration, for workers who qualify for regular unemployment compensation, and whose unemployment is due to the impact of COVID-19

i).         Pandemic Unemployment Compensation (“PUC”): additional UI benefits for workers who qualify for regular unemployment compensation, and whose unemployment is due to the impact of COVID-19

1).        PUC Eligible workers

            PUC is available to individuals who qualify for regular unemployment compensation according to Department of Labor guidelines.

2).        PUC Benefits

PUA benefits equal: the weekly benefit amount determined by each State; plus the additional $600.00 weekly Federal Pandemic Unemployment Compensation amount set forth by the CARES Act.

3).        PUC Duration

While the CARES Act is somewhat ambiguous on this point, according to U.S. Department of Labor guidelines, the PUC program will expire on July 31, 2020, unless otherwise extended. 

ii).        Pandemic Emergency Unemployment Compensation (“PEUC”): extends UI (including an additional weekly $600.00) for workers who have exhausted all rights to State and federal unemployment compensation for benefit years on and after July 1, 2019, affording another 13 weeks (or roughly three months)

1).        PEUC Eligible workers

PEUC is available to UI-eligible individuals who have exhausted all rights to State and federal unemployment compensation for benefit years on and after July 1, 2019.

2).        PEUC Benefits

The regular UI compensation amount, plus an additional $600.00 per week (consistent with Pandemic Unemployment Compensation (“PUC”)).

3).        PEUC Duration

PEUC provides up to an additional 13 weeks (or roughly three months) of State UI benefits, including $600.00 weekly Federal Pandemic Unemployment Compensation, after the employee exhausts all regular State UI benefits,

at which point the employee becomes eligible for up to 39 weeks (or approximately nine months) of PUA benefits through December 31, 2020.

4).        PEUC Eligibility

To receive PEUC, workers must be actively engaged in searching for work. However, the CARES Act provides that “a State shall provide flexibility in meeting such [work search] requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”

3.         Penalties for fraud.

Because CARES Act unemployment benefits are federally funded, CARES Act Sections 2104(f) and 2107(e) provide for federal criminal prosecution for knowing statements of material fact pursuant to Section 1001 of U.S. Code Title 18.  Section 1001 generally imposes prison penalties of up to 5 years. 

An individual found to have made material misrepresentation in an application for CARES Act unemployment relief will also be liable to reimburse the State for the misappropriated unemployment payments.

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