CARES Act: Employer Guidance on the Expansion and Extension of Unemployment Benefits

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") enacted into law on March 27, 2020, provides for the expansion and extension of unemployment benefits. The three main unemployment benefits programs included as part of the CARES Act are highlighted below with a summary of guidance on each for your convenience:

1. Federal Pandemic Unemployment Compensation,
2. Pandemic Emergency Unemployment Compensation, and
3. Pandemic Unemployment Assistance.

Please note: Although the above programs are 100% federally funded, the benefits will be administered by a state's unemployment office once the state enters into an agreement with the U.S. Department of Labor ("DOL").

FEDERAL PANDEMIC UNEMPLOYMENT COMPENSATION

The Federal Pandemic Unemployment Compensation ("FPUC") program provides an additional $600 per week payment to individuals who are collecting regular unemployment benefits as well as those who are now eligible for unemployment benefits as a result of the CARES Act. The additional $600 per week is only available through July 31, 2020.

According to DOL guidance issued on April 4, 2020, the two-step process to calculate and determine entitlement to the $600 FPUC payments is:

1. The state will calculate the weekly benefit amount that the individual would be entitled to receive under regular unemployment compensation or under one of the expanded unemployment compensation programs provided for in the CARES Act; and
    
2. If the individual is eligible to receive at least $1 of such unemployment benefits for the claimed week under either the regular state program or one of the expanded programs, the individual will receive the full additional $600 FPUC payment. Each state's maximum weekly unemployment benefits amounts (or caps) are not changed or impacted by the FPUC benefits.

Eligibility Requirements: To be eligible for benefits, an employee must have hours reduced to under 32 hours per week and be receiving wages that are less than their weekly benefit amount. Minnesota's weekly unemployment benefit amount is approximately 50% of an individual's average weekly wages up to the maximum unemployment benefit of $740 per week.

Examples based on Minnesota's unemployment compensation program:  

Scenario A: Employee is laid off, with no continuing salary or wages. Employee's average weekly wages at time of termination were $1,480.

Benefit Calculation: 50% of employee's regular wages is $740. Therefore, this individual would likely be entitled to the maximum possible payment of $740 per week, plus the additional $600 FPUC payment per week.

Scenario B: Employee is still working, but has had hours and pay reduced. Employee's average weekly wages had been $1,480. Employee had been working full time, but is now working only 15 hours per week and receiving wages of $500 per week.

Benefit Calculation: 50% of employee's regular wages is $740, so that is their maximum weekly benefit amount. Fifty percent of the employee's current weekly earnings—so, $250—will be deducted from the employee's benefit amount, resulting in an anticipated unemployment benefit of $490 for that week [$740 – $250 (50% of $500) = $490]. Because this employee was still eligible that week for state unemployment benefits, they will also receive the additional $600 payment per week through FPUC.

Scenario C: Employee is still working, but has had hours and pay reduced. Employee's average weekly wages had been $1,000. Employee had been working full time, but is now working only 30 hours per week and receiving wages of $750 per week.

Benefit Calculation: 50% of employee's regular wages is $500, so that is their maximum weekly benefit amount. Because employee is receiving wages higher than their maximum benefit amount, employee is not entitled to any unemployment benefit for that week. Because this employee is not eligible to receive even $1 of regular state unemployment benefits, they will not receive the additional $600 payment per week through FPUC.

NOTE: FPUC is all or nothing—it is not prorated.

No impact on employer's experience rating

The FPUC benefits will not impact an employer's experience rating for purposes of calculating an employer's unemployment contribution rate. And in Minnesota, the Governor ordered that the Minnesota Unemployment Insurance Program may not use unemployment benefits paid as a result of the COVID-19 pandemic in computing the future tax rate of a tax paying employer.

No waiting period

For unemployment insurance benefit accounts established between March 1, 2020, and December 31, 2020, the State of Minnesota, like many other states, is suspending the non-payable week requirement, which will allow individuals to become eligible for unemployment benefits as quickly as possible.

Minnesota now requires employer notice to separated employees

In Minnesota, as of April 6, 2020, employers must notify separated employees that they can apply for unemployment insurance benefits. This notice requirement is effective through December 31, 2020. Many employers have been providing this notice already but it is now required.

PANDEMIC EMERGENCY UNEMPLOYMENT COMPENSATION

The CARES Act also provides an additional 13 weeks of Pandemic Emergency Unemployment Compensation ("PEUC") to individuals who have already exhausted their unemployment benefits. This 13-week extension/continuation of state unemployment benefits is available for weeks of unemployment ending on or before December 31, 2020. PEUC benefits include the unemployment benefits that an individual is entitled to receive under applicable state or federal law, plus the $600 FPUC payments while such FPUC benefits are in effect.

To be eligible for PEUC benefits, an individual must have exhausted their applicable unemployment benefits under state or federal law, not be receiving unemployment compensation under Canadian law, and be able and available to work and be actively seeking work. However, states must allow flexibility around the "actively seeking work" requirement where individuals are unable to search for work for reasons relating to COVID-19.

In Minnesota, unemployment benefits are typically available for up to 26 weeks, but as a result of the PEUC program under the CARES Act, an individual in Minnesota may receive unemployment benefits for up to 39 weeks, through the end of December 2020. (But remember that the $600 FPUC payments end on July 31, 2020.)

PANDEMIC UNEMPLOYMENT ASSISTANCE

The CARES Act also establishes the Pandemic Unemployment Assistance ("PUA") program which provides up to 39 weeks of unemployment benefits (including the $600 FPUC payments, until they expire), to those individuals who have exhausted their regular unemployment benefits or who are not typically eligible for regular unemployment benefits, including individuals who are:

• independent contractors,
• self-employed,
• seeking part-time employment, or
• lacking sufficient work history.

The PUA program is not available to individuals who have the ability to work remotely or telework or who are receiving paid leave benefits; however, if such telework hours with pay or paid leave benefits are for less than the individual's customary work week, they may be eligible for a reduced benefit.

An individual who qualifies for and is covered by the PUA benefits must self-certify to the applicable state that they are able and available to work except that they are unemployed, partially unemployed, or are unable to work as a result of one of the COVID-19 related reasons set forth in the CARES Act and listed below:

1. The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
2. A member of the individual's household has been diagnosed with COVID-19;
3. The individual is providing care for a family member or a member of the individual's household who has been diagnosed with COVID-19;
4. 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;
5. 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;
6. 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;
7. 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;
8. The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;
9. The individual has to quit his or her job as a direct result of COVID-19;
10. The individual's place of employment is closed as a direct result of the COVID-19 public health emergency; or
11. The individual meets any additional criteria established by the U.S. Secretary of Labor for unemployment assistance.

On April 5, 2020, the DOL issued guidance [Unemployment Insurance Program] with a list of examples and explanations for each of the foregoing COVID-19 circumstances that may allow an individual to qualify for PUA benefits and further instructs that while such list is non-exhaustive, any other qualifying circumstances must be applied by the states in a manner consistent with the examples provided in the guidance. The PUA benefits are available through the end of December 2020.

We Can Help

Please contact Maslon's Labor & Employment Group and Corporate & Securities Group if you have questions related to the unemployment benefits changes or programs under the CARES Act.