DOL Issues Guidance on New CARES Act Unemployment Insurance Provisions

Written by Jeremy Mittman and Thea Rogers

Last week, the DOL issued two guidance letters (available here and here) to state workforce agencies (such as the California EDD) on the unemployment insurance provisions of the recently enacted CARES Act. The CARES Act, which has been discussed in prior blog posts at length (see, e.g. here, here and here), provides emergency assistance for certain individuals, families, and businesses affected by the COVID-19 pandemic.  Most notably, the DOL guidance instructs state agencies on how to implement and operate two programs that were included as part of the CARES Act involving unemployment insurance benefits: the Pandemic Unemployment Assistance (PUA) program and the Federal Pandemic Unemployment Compensation (FPUC) program. Additionally, the federal government will provide 100% reimbursement to states that provide compensation to individuals beginning on their first week of unemployment (i.e., states which do not require a waiting week) and enter into an agreement with the DOL.

What is the PUA Program?  PUA provides benefits to individuals who are self-employed, independent contractors, seeking part-time employment, individuals lacking sufficient work history or whom otherwise would not qualify for regular unemployment compensation under state or federal law or pandemic emergency unemployment compensation (PEUC), including those who have exhausted all rights to such benefits.

The program provides up to 39 weeks of benefits to qualifying individuals who are otherwise able to work and available for work.  Benefit payments under PUA are retroactive for weeks of unemployment, partial employment, or inability to work due to COVID-19 reasons, starting on or after January 27, 2020. The CARES Act specifies that PUA benefits cannot be paid for weeks of unemployment ending after December 31, 2020.

What is the FPUC Program?  FPUC provides an additional $600 per week in federal benefits to individuals who are already collecting certain unemployment compensation. This additional unemployment benefit is available for weeks of unemployment beginning after the date on which the state enters into an agreement with the DOL and ending with weeks of unemployment ending on or before July 31, 2020.

Coordination of Programs.  An individual can be eligible for multiple programs, including multiple programs authorized by the CARES Act. When this occurs, an employee who is eligible for traditional unemployment benefits generally must first apply for and receive those benefits.  Once these traditional benefits have been exhausted, the individual may then be eligible for up to 13 weeks of benefits under the CARES Act (i.e. PEUC). If these PEUC benefits are exhausted, the employee may be eligible to receive additional benefits of up to 13 or 20 weeks, depending on the state’s unemployment rate and if state law provides a trigger for periods of high unemployment.

Short-Term Compensation (STC) Programs.  The guidance also discusses federal reimbursement of state STC programs, also known as Shared Work or Work Share, a lay-off aversion program whereby an employer reduces the hours for a group of workers to avoid layoffs, and these workers receive a partial unemployment benefit payment.  Federal reimbursement of STC benefit costs is dependent on whether or not a state has qualified programs already in existence, or enacts a new law providing for the payment of STC after March 27, 2020.  The DOL is currently in the process of developing/will disseminate model language for states to use when developing and enacting STC programs. The agency will also be developing reporting requirements for states and providing technical assistance.

Finally, the guidance letters reiterated that, while the CARES Act does provide workers some flexibilities, quitting work without good cause to obtain additional benefits would amount to fraud. The Act expressly provides that if an individual has obtained any benefit through fraud, the individual is ineligible for any additional benefit payments, must pay back the benefits, and is subject to federal prosecution.