Unemployment Insurance Benefits – Frequently Asked Questions
Published April 23, 2020
What changes have been made to Unemployment Insurance (UI) under the CARES Act/Pandemic Unemployment Assistance (PUA)?
- Beginning the week of March 29, 2020, UI recipients will be eligible for an additional payment of $600 through July 31, 2020.
- UI duration has been expanded from 26 weeks to 39 weeks.
- In addition to those who do not typically qualify, individuals with limited work history now qualify.
Will the additional payment of $600 to employees for unemployment be charged against the employer?
Under the CARES Act, the $600 payment will be paid by the federal government and will not be charged to employer accounts.
We have an employee who works at our company in Kentucky but lives in another state. Where would this employee draw unemployment benefits?
To receive UI benefits, the employee should file a claim with the UI program in the state where they worked.
What about short-time compensation (“STC”) programs?
STC, or “work share” or “shared work,” programs provide employers with an alternative to layoffs. STC programs allow employers to apply for state approval to administer a plan that reduces the wages and hours for affected employees, while allowing those employees to receive partial unemployment benefits from the state. Under the CARES Act, the federal government will cover 100% of the unemployment compensation paid under existing state STC programs. The CARES Act also creates incentives for states that have not yet created programs to do so.
Are employees who are part of a work share program eligible for the additional $600 weekly benefit under the CARES Act?
How is this going to be administered?
FPUC and STC programs. Individuals receiving benefits under an approved STC program also are eligible for the additional $600 weekly FPUC payment through July 31, 2020. As an example, an individual whose hours and wages are reduced by 40% as part of an approved STC program will receive: 60% regular wages, 40% of their weekly unemployment benefit, and the $600 FPUC payment for weeks ending on or before July 31, 2020.
Use of Short-Time Compensation (or Shared Work) Programs Is Encouraged (Section 2108-2110)
The CARES Act promotes the use of short-time compensation (STC) arrangements, often referred to as work share or shared work arrangements. The goal of STC programs is to avert layoffs, encouraging employers to retain employees on reduced hours as a means of avoiding layoffs. Workers whose hours are reduced become eligible for partial unemployment insurance benefits. Many states have pre-existing STC programs, including Arizona, Arkansas, California, Colorado, Connecticut, Florida, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Vermont (prior to the passage of the CARES Act, legislation to repeal the existing Vermont shared work program had been passed by the state house, amended and passed by the state senate and is currently in committee), Washington and Wisconsin. The CARES Act supports these programs and allows other states to temporarily implement a short-time compensation program, to provide employers with an alternative to layoffs during the pandemic with the hope that it will facilitate their ability to increase operations quickly when it is safe to do so.
To encourage states to promote existing STC programs, under the CARES Act the federal government will reimburse a state for the total STC benefit costs, up to a maximum of 26 weeks for each participant. For states without an existing STC program, the federal government will reimburse one-half of the STC benefit costs, up to a maximum of 26 weeks for each participant.
Partial unemployment benefits paid to employees participating in an STC program will also be supplemented with the additional $600 PUC benefit (through July 31).
Federal reimbursements for regular benefits paid under State STC programs are available during the period March 27, 2020, through December 31, 2020.
Federal law permits flexibility for states to amend their laws related to unemployment insurance benefits. For specific guidelines, please refer to your state Unemployment Office.
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For more information, contact firstname.lastname@example.org and a member of MCM CPAs & Advisors COVID-19 Solutions Group will be in touch.
You should consider consulting your legal counsel regarding these matters as well as any union contract considerations. Nothing in this document should be construed as providing tax advice. Please consult with your own professional tax advisor. In addition, this document represents the information that we have up to the date the presentation was made and cannot be relied upon for additional updates beyond that date.