COVID-19: Unemployment Benefits

Zach Herman 4/3/2020

Man sits against wall looking upwards

Unemployment Insurance Overview

The Federal-State Unemployment Insurance Program provides temporary unemployment benefits to eligible unemployed workers. Requirements for eligibility and program administration vary across state lines. Each program administers its unemployment insurance program within guidelines determined by federal law. Unemployment insurance laws enacted by a state also determine how to calculate eligible recipient benefits, the duration of the coverage and taxes owed for the program. The Department of Labor is able to make changes to guidelines for state governments on how to administer their benefits. They most often make these changes during times of economic difficulty or a federal state of emergency. 

State Unemployment Trust Fund solvency

Each State's unemployment fund is managed by the Federal Government and used by the state to pay out unemployment claims. Every year the Department of Labor releases a report on the solvency of the state's trust fund. The report can be found here

Expanding Administrative Capacity

Over the Past two weeks state workforce agencies have seen an unprecedented increase in weekly claims filed for unemployment insurance. Since March 15th 9.9 million people have field for unemployment across the country. This record-breaking volume of applications as caused stress on state unemployment offices and administrations.

The CARES Act allows state workforce agencies maximum flexibility in hiring staff to manage increased applications and case workload.

            “This provision gives states maximum flexibility to recruit and select staff through December 31, 2020, to quickly process applications and claims. Note that the flexibility only applies for responding to workload and increased demand resulting from the spread of COVID-19.”

Many states are also employing a couple of extra measures to manage the influx of applicants. We are seeing two primary strategies states are using.

  1. Some states are scheduling when applicants can apply.
    1. For example, Michigan is only allowing applications on Monday and Wednesday for People whose Last name starts with A-L. Applicants whose last names start with M-Z apply on Tuesday and Thursday. Applicants who missed their day can apply on Friday or Saturday.
    2. New York, Illinois, Maryland, and Colorado are also scheduling application days.
  2. Other states are working on expanding staff capacity by either training employees from other programs or hiring more staff.
    1. New York, California, and Kentucky are all state examples of this.

 

Federal Response:

 

First Round of Federal Guidelines

On March 12, the U.S. Department of Labor announced expanded flexibility and new guidance for states on how to administer unemployment benefits for workers affected by COVID-19. The new guidelines for states include but are not limited to:

  1. An employee can be eligible if an employer temporarily ceases operations due to COVID-19, preventing employees from coming to work.
  2. Employees can be eligible if they are quarantined with the expectation of returning to work after the quarantine is over.
  3. Employees can also be eligible if they leave employment due to a risk of exposure or infection or to care for a family member.
  4. States are encouraged to waive the weeklong waiting period, which is not required by federal law.
  5. In addition, federal law does not require an employee to quit to receive benefits due to the impact of COVID-19.
  6. Employees who are currently receiving paid sick leave or family leave are, however, considered employed and therefore not eligible.

 

Second Round of Federal Guidelines

On April 2nd the Department of Labor released a second set of guidelines for states relating to the implementation of new unemployment insurance programs provided in the CARES Act. These new provisions include among other things the extension and expansion of unemployment benefits during the pandemic.

 

Programs include:

  • Pandemic Unemployment Assistance (PUA) (Section 2102):
    • This prgram provides up to 39 weeks of benefits and is available starting with weeks of unemployment beginning on or after January 27, 2020 and ending on or before December 31, 2020. This program covers individuals who are self-employed, seeking part-time employment, or whom otherwise would not qualify for regular UC or EB under state or federal law or Pandemic Emergency Unemployment Compensation (PEUC) under section 2107. Coverage also includes individuals who have exhausted all rights to regular UC or EB under state or federal law, or PEUC.
  • Emergency unemployment relief for governmental entities and non-profit organizations (Section 2103).
    • The Department is authrized to issue guidance to allow states to interpret their state UC laws in a manner that would provide 4 maximum flexibility to reimbursing employers as it relates to timely payments in lieu of contributions and assessment of penalties and interest.
  • Emergency increase in unemployment compensation benefits, called Federal Pandemic Unemployment Compensation (FPUC) (Section 2104).
    • This prgram provides an additional $600 per week to individuals who are collecting regular UC (including Unemployment Compensation for Federal Employees (UCFE) and Unemployment Compensation for Ex-Servicemembers (UCX)), PEUC, PUA, EB, STC, Trade Readjustment Allowances (TRA), Disaster Unemployment Assistance (DUA), and payments under the Self Employment Assistance (SEA) program. This is available for weeks of unemployment beginning after the date on which the state enters into an agreement with the Department and ending with weeks of unemployment ending on or before July 31, 2020
  • Temporary full federal funding of the first week of compensable regular unemployment for states with no waiting week (Section 2105).
    •  States that prvide compensation to individuals for their first week of unemployment
  • Pandemic Emergency Unemployment Compensation (PEUC) (Section 2107).
    • This prgram provides up to 13 weeks of benefits and is available for weeks of unemployment beginning after the date on which the state enters into an agreement with the Department and ending with weeks of unemployment ending on or before December 31, 2020.
  • Temporary financing, agreements, and grants for Short-Time Compensation (STC) (Section 2108 through Section 2111).
    • STC, als known as Shared Work or Work Share, is a lay-off aversion program where an employer reduces the hours for a group of workers to avoid layoffs and these workers receive a partial unemployment benefit payment.

Extended Benefits

Eligible laid-off workers can receive regular unemployment benefits for as long as 26 weeks in most states.

After exhausting those benefits, individuals in states with rising unemployment can qualify for an additional 13 weeks of benefits—or 20 weeks in some states through the Extended Benefits (EB) program.

CARES Act

On Friday March 27 the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed. Part of the two trillion dollars in spending in the CARES Act included significant investment in state unemployment insurance programs. For a more detailed summary of everything included in the CARES act read our NCSL brief on the bill.

 

The CARES act affects unemployment insurance in the following ways:

  • 360 million for Department of Labor to invest in programs that provide training and supportive services for dislocated workers, seniors, migrant farmworkers and homeless veterans. Includes funding for implementing new paid leave and unemployment insurance benefits.
  • Expands unemployment insurance from three to four months, and provides temporary unemployment compensation of $600 per week, which is in addition to and the same time as regular state and federal UI benefits.
  • Part-time, self-employed and gig economy workers now have access to UI benefits.
  •  Allows employers to receive an advance tax credit from the Treasury instead of having to be reimbursed on the back end.
  • $260 billion investment into the unemployment insurance program.
  • Creates regulatory authority to implement the tax credit advances.

State Actions

States have been implementing a variety of emergency rules for unemployed workers affected by COVID-19. Actions include waving the seven-day waiting period to receive benefits, allowing businesses to apply for workshare, and extending benefits to employees who are under quarantine. The following states have issued guidance on how to administer unemployment insurance benefits to workers affected by COVID-19.