Expanded Unemployment Coverage Under the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law March 27, 2020 provides for sweeping relief to families and businesses affected by the Global COVID-19 pandemic. Among its many provisions are modifications and expansions to the country’s Unemployment Insurance system.

As many Americans are utilizing the Unemployment Insurance system for the first time, it is important to understand who will qualify, and what sort of assistance they are likely to receive.

The CARES Act expands Unemployment Insurance by leaving the traditional system in place, with expanded coverage periods and loosened compliance requirements, through a system called Pandemic Emergency Unemployment Compensation (PEUC). It then creates a parallel program called Pandemic Unemployment Assistance (PUA) for those who don’t qualify under the traditional system. Finally, it increases the coverage under both systems by $600 per week, referred to as Pandemic Unemployment Compensation (PUC).

Unemployment Insurance Generally

 Unemployment Insurance is a program regulated by the Federal government and administered by the States, which provides temporary cash benefits to employees who lose their jobs through no fault of their own. It is a program that employees pay into, often unknowingly, through amounts withheld from their paychecks by their employers. Benefits are typically a percentage of a worker’s income over the past year, up to a certain maximum. Typically, they replace about 45 percent of a worker’s income, though the exact amount varies by state.

Qualifying for traditional Unemployment Insurance typically has a number of requirements which a worker must meet before being eligible. For instance, Unemployment Insurance typically only covers employees, and not sole proprietors and other small business owners, with some limited exceptions. It also requires that a minimum number of hours have been worked and a minimum compensation has been earned over the so-called base period, typically the first four of the previous five calendar quarters. Finally, workers are typically required to actively seek a new source of employment while receiving benefits.

Unemployment Insurance typically has a 1 week waiting period, and in most states, benefits are capped at 26 weeks, though in Missouri it is 20 weeks.

Pandemic Unemployment Assistance (PUA)

Recognizing that many people affected by the COVID-19 pandemic may not qualify under the traditional Unemployment Insurance requirements, yet are still in an economically vulnerable position, the CARES Act creates a parallel system called Pandemic Unemployment Assistance (PUA) with far broader eligibility. PUA is offered as an alternative to traditional Unemployment Insurance rather than an additional payment, and is not available to individuals who qualify under the traditional system.

PUA is, broadly speaking, meant to cover three otherwise excluded groups. First, it covers self-employed individuals who normally do not pay into Unemployment Insurance, and thus are ineligible to receive benefits. Second, it covers individuals who have exhausted their allowable benefits under traditional Unemployment Insurance. Third, it covers individuals without a long enough work history to satisfy the base-period requirements discussed above.

This does not mean, however, that anyone falling into one of the groups discussed above may qualify. Instead, it is meant to apply to “covered individuals” who are unemployed, partially unemployed, or unable to work due to the COVID-19 outbreak. These include individuals if:

• They have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis;
• A member of their household has been diagnosed with COVID-19;
• They are providing care for someone diagnosed with COVID-19;
• They are providing care for a child or other household member who can’t attend school or work because it is closed due to COVID-19;
• They are quarantined or have been advised by a health care provider to self-quarantine;
• They were scheduled to start employment and do not have a job or cannot reach their place of employment as a result of a COVID-19 outbreak;
• They have become the breadwinner for a household because the head of household has died as a direct result of COVID-19;
• They had to quit their job as a direct result of COVID-19;
• Their place of employment is closed as a direct result of COVID-19; or
• They meet other criteria established by the Secretary of Labor.

PUA does not include anyone who is eligible to telework with pay or is receiving sick/paid leave, or anyone who is an undocumented worker.

The maximum benefits allowable under PUA are those defined in 20 CFR 625, Disaster Unemployment Assistance. In Missouri this is determined by taking an individual’s two highest earning quarters during the base period, averaging them, and multiplying them by .4, though the amount is capped at $320 per week. Individuals may receive up to 39 weeks of assistance, starting retroactively on January 27, 2020, and ending (unless extended) on December 31^st, 2020.

The minimum benefit under PUA is generally 50 percent of the average weekly unemployment compensation in the state.

Pandemic Unemployment Compensation (PUC)

 Workers who qualify for assistance under either the traditional Unemployment Insurance system or the new PUA system will receive their normal benefits under such systems, as well as $600 per week of Pandemic Unemployment Compensation (PUC). The extra $600 does not affect Medicaid or CHIP eligibility.

Pandemic Emergency Unemployment Compensation (PEUC)

 The CARES Act encourages states to make several changes to their Unemployment Insurance programs. First, it encourages them to expand the coverage period by 13 weeks. Second, it encourages states to loosen requirements to actively seek unemployment when it is impossible due to the COVID-19 pandemic. Third, it encourages states to waive the one week waiting period and provides incentive by covering the bill for states who do so.

If you are looking for a business attorney to guide you through these turbulent times, send us a message through the form below. One of our team members will reach out to schedule a consultation.

*This post was originally published on April 2, 2020