House Passes Coronavirus Aid, Relief, and Economic Security Act
As COVID-19 inflicts unprecedented disruption across every sector of the economy, the unemployment insurance (UI) system is undergoing extraordinary strain. The U.S. Department of Labor (DOL) reported that 3.3 million people filed for unemployment insurance during the week that ended on March 21 — the biggest spike in unemployment filings in U.S. history. Analysts predict that jobless numbers in the coming weeks will be equally staggering, if not more so.
Lawmakers recently passed a $2 trillion emergency relief bill designed to mitigate economic losses and support workers experiencing COVID-19 induced job disruption. The bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enhances the existing state UI system and creates a parallel system called Pandemic Unemployment Assistance. The enhanced UI system provides added support for those eligible for traditional state UI benefits, while the Pandemic Unemployment Assistance system provides support for individuals who are not otherwise eligible for benefits under the state UI system, including those who are self-employed, independent contractors, or lack sufficient work history.
While the UI system normally extends benefits to individuals for a period of 26 weeks, both the bill’s enhanced UI system and Pandemic Unemployment Assistance system provide up to 39 weeks of coverage at regular state UI rates and provide an additional $600 per week in payments until July 31. And while the UI system normally requires applicants to wait a period of one week before becoming eligible for benefits, the CARES Act waives this requirement, making a worker eligible for benefits immediately upon the time of unemployment or underemployment.
Eligible individuals may claim benefits under each system at any point during the period of time between January 27 and December 31, 2020.
The CARES Act provides for the enhancement of state UI offerings during the COVID-19 national emergency by allowing states to enter into agreements with the federal government. Presumably, every state will enter into these agreements. The enhanced UI system will provide the normal 26 weeks of UI at regular state-set rates to individuals eligible for benefits under the state system. Upon exhaustion of those benefits, those individuals will be eligible for an additional 13 weeks at the normal state rate.
The federal government will fully fund the additional 13 weeks of benefits and fund half of the cost of the 26 weeks for certain “self-insured” government entities and nonprofits. As the bill waives the normal one-week waiting period for UI eligibility, the federal government will also pick up the totality of costs for that first week of payment. The CARES Act also provides an additional $600 per week to individuals qualifying for UI until July 31. The federal government will fund these payments, which will be on top of an individual’s benefits at the normal, state-set rate.
Pandemic Unemployment Assistance
The CARES Act creates a new program, Pandemic Unemployment Assistance, so that individuals not eligible for UI under the state system can also receive UI benefits during the COVID-19 national emergency. Pandemic Unemployment Assistance will provide UI benefits to workers such as the self-employed, independent contractors, or those lacking the necessary work history for traditional UI eligibility. Qualifying individuals must provide self-certification that they are otherwise available to work but are unemployed, partially unemployed, or unable to work due to COVID-19 related reasons, including the receipt of a COVID-19 diagnosis, the presentation of COVID-19 symptoms, the need to self-quarantine, caregiving responsibilities, an inability to reach their job, or the fact that their place of work is closed. Individuals who have had to quit their jobs as a direct result of COVID-19 are also eligible for benefits under the Pandemic Unemployment Assistance system, although DOL will need to place parameters and issue guidance around this provision to provide clarity, particularly with respect to the words “had to.” While states will implement the Pandemic Unemployment Assistance system through an agreement with the DOL, the DOL reserves the right to administer the program in instances where it finds the state system to be inadequate.
The Pandemic Unemployment Assistance system provides 39 weeks of unemployment benefits at normal state UI system rates for qualifying individuals, and includes the supplemental $600 per week through July 31.The CARES Act stipulates that benefits under the Pandemic Unemployment Assistance cannot be used to extend total benefits beyond 39 weeks, so any payments the individual received under the state UI system during the covered time period would be counted against the 39-week entitlement.