On April 4, 2020, the U.S. Department of Labor (“DOL”) provided clarity on the scope of the $600 per week supplemental benefit available under the CARES Act, stating that even individuals entitled to partial unemployment compensation would nonetheless be entitled to the full additional $600 per week benefit, including individuals receiving short-time compensation (“STC”) or work share payments.
As we previously blogged about here, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or “CARES”) went into effect on March 27, 2020. The CARES Act was passed in an effort to mitigate the effects of the COVID-19 pandemic by offering a range of benefits to states and employers, as well as individuals unemployed due to COVID-19-related reasons, including expanded unemployment benefits. While the DOL has not yet promulgated formal regulations pertaining to the CARES Act’s unemployment provisions, the DOL’s Employment and Training Administration has issued Unemployment Insurance Program Letters (“UIPLs”) to clarify ambiguities relating to CARES unemployment provisions.
In UIPL No. 15-20, released April 4, 2020, the DOL provided guidance on the Federal Pandemic Unemployment Compensation (“PUC”). As background, individuals receiving unemployment insurance benefits receive an amount determined under state law; however, the CARES Act provides an additional federally-funded payment of $600 per week, for up to four months, until July 31, 2020. This $600 payment is known as PUC. The text of the CARES Act is ambiguous with regard to which programs PUC would supplement and if the $600 per week payment would be prorated in certain situations.
In UIPL No. 15-20, the DOL states that the $600 per week PUC may be provided in full to individuals who are collecting the following benefits.
- State unemployment insurance (“UI”) benefits, implemented pursuant to state UI laws;
- Pandemic Emergency Unemployment Compensation (CARES § 2107), which provides an additional 13 weeks of UI benefits, subject to the state entering into an agreement with the Secretary of Labor;
- Unemployment benefits under § 2102 of CARES, offering up to 39 weeks of UI benefits to individuals who would otherwise not qualify for state UI benefits or extended benefits and are “unemployed, partially unemployed, or unable or unavailable for work because” of a COVID-19-related reason;
- Short-Time Compensation (“STC”) or work share payments though a qualifying STC program; and
- Other programs, such as Unemployment Compensation for Federal Employees; Unemployment Compensation for Ex-Service Members’ Extended Benefits; Trade Readjustment Allowances; Disaster Unemployment Assistance; and Payments under the Self-Employment Assistance program.
Notable is the DOL’s clarification that PUC will apply to STC programs. STC programs are an alternative to furloughs and layoffs for employers experiencing a reduction in available work. Under a STC program, however, an employer voluntarily makes an agreement with the state unemployment office to, in an attempt to avoid furloughs and layoffs, reduce employee hours by 10 to 60%, dependent on state law. Workers with reduced hours under a STC program will generally be eligible for prorated (otherwise known as partial) state UI benefits, even if they don’t qualify under the particular state’s unemployment insurance eligibility rules.
Because STC programs generally only provide for prorated unemployment benefits, it was unclear whether the $600 supplemental PUC would similarly be prorated. Under UIPL No. 15-20, the DOL did not adopt a proration approach – it stated that individuals receiving STC payments will receive the additional $600 supplement, provided in full. The DOL explained that if an individual “is eligible to receive at least one dollar ($1) of underlying benefits for the claimed week, the [individual] will receive the full $600.” This also suggests, beyond STC programs, that individuals who are receiving any level of unemployment benefits, including partial benefits due to a reduction in hours or a part-time position, will also be eligible for the full $600 per week supplemental benefit.
As a caveat, Section 2109 of the CARES Act requires an employer to repay 50% of unemployment benefits under an STC program if the state where the employer is operating does not have an STC program in place under its laws. It is unclear whether this would require the employer to pay 50% of the PUC.
The states that currently have established STC programs include: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Washington, and Wisconsin. The specific terms of STC programs differ from state to state.
The DOL is expected to continue to release UIPLs and other guidance regarding the CARES Act, including its unemployment provisions.
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