Federal Government Provides Unemployment Benefits to Millions of Unemployed Americans through the CARES Act

Posted on April 7th, 2020 by Derek P. Hartman

Title 2: Assistance for American Workers, Families, and Businesses

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “Act”) into law, which is intended to mitigate some of the economic effects that will occur as a result of a large percentage of the American workforce being unable to work and, consequently, earn an income as a result of the COVID-19 pandemic. This Act introduced an estimated $2 trillion into the economy and operates, mechanically, through the issuance of stimulus payments to individual citizens, the expansion of unemployment benefits, and relaxed and broadened lending programs (including loan forgiveness) that are tailored to small businesses.

This article focuses on Title 2 of the Act, titled “Assistance for American Workers, Families, and Businesses, specifically the federal unemployment program created by the “Relief for Workers Affected by Coronavirus Act” (the “Relief for Workers Act”).

As always, we encourage you to contact our office if you have any questions about this publication or if you need any legal services or advice on solutions to issues that may impact your business, your customers, or your employees.

 The Relief for Workers Affected by Coronavirus Act.

Subtitle A of Title 2 of the Act creates a federal unemployment compensation system for independent contractors, sole proprietors, and other “gig” workers who are adversely affected by COVID-19. This program extends coverage to individuals who are not currently covered by Ohio’s unemployment insurance system or have otherwise exhausted their unemployment benefits.

 Section 2102: The Pandemic Unemployment Assistance Program (“PUA”).

The PUA program was enacted for the purpose of expanding unemployment benefits to individuals who: (1) are not otherwise eligible for, or have exhausted all rights to, regular unemployment or expanded benefits under state or federal law or who have exhausted their PEUC benefits; and (2) are unemployed, partially unemployed, or unable to work because of certain COVID-19-related circumstances. Eligible individuals include those individuals: (i) who have been diagnosed with COVID-19 or are experiencing symptoms of COVID-19 and are seeking a medical diagnosis; (ii) who have a member of his/her/their household who has been diagnosed with COVID-19; (iii) who are providing care for a family member or household member who has been diagnosed with COVID-19; (iv) who are the primary caregiver for a child or other person in the household who is unable to attend a school or another facility that has been closed as a direct result of COVID-19 and such school or facility care is required for the individual to work; or (v) whose place of employment is closed as a direct result of COVID-19.

Benefits under the PUA program begin retroactively on January 27, 2020 and will continue through December 31, 2020. Individuals that are eligible for PUA may receive up to a maximum of 39 weeks of benefits. Individuals who can work remotely with pay or are currently receiving other paid sick leave or other leave benefits are ineligible for PUA benefits.

Individuals eligible for the PUA program will receive the amount they would be entitled to if they were eligible to participate in their state’s regular unemployment insurance benefit program, plus an additional $600.00 per week through the FPU payment, until that program expires on July 31, 2020.

Section 2104: The Pandemic Unemployment Compensation Program (“PUC”).

 The PUC program was enacted for the purpose of providing covered individuals an additional $600.00 per week in unemployment benefits. A covered individual is defined as an individual who: 1) already qualifies for state unemployment benefits; or 2) meets the criteria for the expanded group of covered individuals under the PUA program.

This $600.00 per week payment is in addition to the amount of state unemployment benefits to which a covered individual is otherwise entitled. The PUC program is effective from March 29, 2020 through July 31, 2020. Individuals are not eligible to begin receiving the PUC payment until the state where they live signs an agreement with the federal government to administer the program in accordance with the Act. Once an agreement is signed by their state, individuals who reside in that state will be eligible to receive the PUC payment beginning the first week after the agreement is signed.

Section 2107: The Pandemic Emergency Unemployment Compensation (“PEUC”).

 The PEUC program was enacted for the purpose of extending an additional 13 weeks of state unemployment benefits to individuals who: 1) have no further rights to regular unemployment compensation under state or federal law; 2) are not receiving unemployment under Canadian law; and 3) are able, available, and actively seeking work. Payments made under the PEUC program are equal to the same weekly rate that the employee is eligible to receive under state (regular unemployment) or federal law (PUA program), plus an additional $600.00 per week through the FPU payment, until that program expires on July 31, 2020.

The Relief for Workers Act contains several other key provisions which are summarized as follows:

Requires states to agree to remove the one-week waiting period before a claimant can become eligible for payments. Ohio already removed the waiting period pursuant to Executive Order 2020-03D.

Employers are not required to contribute towards these new federal unemployment benefits. Employers state unemployment insurance premiums will not be affected.

Payments that are made to individuals pursuant to the Relief for Workers Act are taxable.

Those receiving paid leave under FFCRA or paid leave under an employer or state or local law cannot receive federal unemployment assistance under the Act at the same time.

The Act offers states the opportunity to enter into agreements with the federal government to receive funding for state-enacted “short-time compensation programs” to subsidize employees who have their hours reduced in lieu of a layoff. The federal government funds the difference between the reduced hour payments and the UC benefits. Ohio, having already established the SharedWork Ohio layoff aversion program, should be eligible to participate in this program.

The Department of Labor has issued several letters that are intended to provide initial guidance to the states on how to implement these expanded unemployment benefit programs. Those letters can be accessed here.

We anticipate that the Department of Labor will be issuing rules and regulations in the coming weeks which will supersede these guidelines. We will supplement this article with an overview of those regulations once they become available.