Overview of Unemployment Benefits Changes Under the CARES Act

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Ask the Advisor: I am a private employer. Does the FFCRA apply to me if I have more than 500 employees? How do I count them?
April 21, 2020
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April 23, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020, and is a $2.2 trillion economic stimulus package designed to support individuals and businesses affected by the COVID-19 pandemic. This Act is important because it provides federal dollars at this time of crisis to state unemployment insurance benefit (UI) programs and to individuals who would not normally have this assistance. The Act is separate from the Families First Coronavirus Response Act (FFCRA), which was enacted mid-March.

The CARES Act makes significant changes to UI benefits, which are administered by the states. The CARES Act allows states to opt in to an agreement with the federal government to receive enhanced UI benefits and Pandemic Unemployment Assistance funded by the federal government.

Since individual determinations about worker eligibility for UI benefits are made by the states, we recommend not speculating about or attempting to calculate how much your workers will receive.

The key provisions of the CARES Act are as follows:

Additional Cash Benefits for Claimants and Longer Benefit Period
The CARES Act added an additional $600 to the weekly UI benefits amount that an individual would normally receive, for up to four months, through July 31, 2020. (Some may earn more than they would working.) The $600 is in addition to the state benefit amount and applies to all unemployed workers. The Act also increases the length of time someone can be on unemployment benefits to a maximum of 39 weeks. (For many states, this will be an increase of 13 weeks of benefits.)

While these unemployment benefits are generous, employers should still consider their options and incentives under the CARES Act to keep workers employed before making decisions about reduced hours, furloughs, or layoffs.

More Workers Will be Eligible for Pandemic Unemployment Assistance (PUA)
The PUA program provides supplemental unemployment insurance benefits to individuals who would not normally qualify for traditional UI benefits, such as:

  • Self-employed workers;
  • Independent contractors;
  • Gig workers;
  • Low wage workers who can no longer work because of the pandemic;
  • Those without sufficient work history;
  • Individuals who have exhausted their regular unemployment benefits and extended federal benefits. This means that traditional employees may apply for PUA after all of their other unemployment benefit options have expired.

The PUA program runs from January 27, 2020, to December 31, 2020. This means unemployment assistance is available to covered individuals for weeks of unemployment, partial unemployment, or inability to work caused by COVID-19 beginning on or after January 27, 2020, and ending on or before December 31, 2020.

A “covered individual” for PUA includes anyone who is not eligible for regular unemployment compensation or expanded benefits and who provides “self-certification” that they are able and available to work but unemployed or partially unemployed or unable to work because of any of the following:

  1. They were diagnosed with COVID-19 or are experiencing symptoms of COVID-19 and are seeking a medical diagnosis;
  2. A household member was diagnosed with COVID-19;
  3. They are providing care for a family member or household member diagnosed with COVID-19;
  4. They are the primary caregiver for a child, or another person in their household, who is unable to attend school or another facility that is closed as a direct result of COVID-19 and that school or such facility care is required for the individual to be able to work;
  5. They are unable to reach their workplace because of a quarantine imposed as a direct result of COVID-19;
  6. They are unable to reach their workplace because a health care provider has advised them to self-quarantine because of COVID-19 related concerns;
  7. They were scheduled to commence employment and do not have a job or is unable to reach the job as a direct result of COVID-19;
  8. They have become the breadwinner or major support for a household because the head of household died as a direct result of COVID-19;
  9. They had to quit their job as a direct result of COVID-19;
  10. Their workplace is closed as a direct result of COVID-19; or
  11. They meet any additional criteria established by the Secretary of the Department of Labor for unemployment assistance.

Individuals who are able to telework with pay or who are receiving paid sick leave or other paid leave benefits, regardless of whether they meet any of the qualifications above, will not qualify for these benefits.

One-Week Waiting Period for UI Benefits Removed
The CARES Act provides federal funding for states to remove the waiting week to receive unemployment compensation. However, many states voluntarily removed their one-week waiting period prior to the Act’s passage. It is likely that remaining states will also remove their waiting period.

Employees who experience reduced hours, furloughs, or layoffs should be encouraged to file for UI benefits as soon as possible by following their state’s website guidance. We are directing clients to contact their state employment department for questions about these expanded unemployment insurance benefits because the law is in flux and these departments are the most qualified to answer questions about their (and the federal) UI programs.


When do expanded UI benefits and Pandemic Unemployment Assistance take effect? It depends on the relevant state unemployment agency. Expanded UI benefits for unemployed workers will depend on when your state opts in to the federal program. States are now awaiting implementation guidance from the DOL to implement the various provisions and building the infrastructure to take applications under the new rules.

The PUA program runs from January 27, 2020, to December 31, 2020. This means unemployment assistance is available to covered individuals for weeks of unemployment, partial unemployment, or inability to work caused by COVID-19 beginning on or after January 27, 2020, and ending on or before December 31, 2020. Check with your state unemployment agency for more details.

How do I know my state’s current Maximum Weekly Benefit Amount (WBA) and calculation method?  State maximum WBAs range from $235 to over $1000. Please refer to the chart here for information about each state’s regular unemployment minimum and maximum WBA and calculation information.  Please direct questions about WBA calculation to your state’s unemployment department.  We do not recommend providing employees with estimated benefits and recommend directing them to the state’s employment department website for information about their benefits.

What is this “work sharing” I keep hearing about?
Work share (or “short-time compensation”) is where the company signs into an agreement with the state employment department to keep people working. There are strings attached, but ultimately employees continue working and can often get higher weekly UI benefits than they would with a partial claim. The federal government will be funding existing work share programs and adding incentives for states to provide them if they don’t already. Start here to see if your state currently has a work share program. 

How will Pandemic Unemployment Assistance work? Am I (or one of my independent contractors or other workers) eligible?
There are a lot of unanswered questions about how PUA will work. We recommend referring those who may be newly eligible for PUA benefits to the state’s unemployment department for information. We anticipate that states will issue additional information and application guidelines for independent contractors and others not typically eligible for unemployment benefits.

Can workers get a higher benefit than they previously made in wages? Won’t that be a disincentive to look for work?
Yes, they can; however, this primarily affects lower wage earners. The $600 payment alone reflects a 40-hour workweek at $15/hour. The federal pandemic unemployment compensation ($600) combined with the underlying state unemployment benefit, would replace 100 percent of wages for the average US worker. Normally UI benefits do not replace all lost wages (and nationally replace about 40 percent of wages). UI benefits are normally intended only to assist workers while they are actively seeking new employment. However, nothing about this virus or situation is normal; COVID-19 is a public health emergency. Providing an average wage of $15 per hour was not meant to disincentivize work but rather protect all workers. This especially applies to workers who would normally earn very low unemployment benefits—by providing an unemployment wage replacement at $15 per hour, they are not forced to work in violation of public health orders (at a higher risk of infection) and thus are not disparately affected by this pandemic.

What about people whose hours have been reduced? Can they get unemployment insurance payments?
Yes, individuals can receive benefits for partial unemployment. In a few states, an individual is considered totally unemployed in a week even when certain small amounts of wages are earned. In most states, an individual is considered to be partially unemployed if they are working less than full-time and their earnings are less than the weekly benefit amount that they would be eligible for if they were unemployed. Some states may disregard a portion of a person’s earnings in this calculation as well, meaning some of their earnings would not count when calculating their weekly benefit amount they are eligible for (see Table 3-8 here for specific state information).

Will the $600 Pandemic Unemployment Assistance (PUA) be prorated for those who are partially unemployed (working reduced hours)?
No. Guidance recently released by the Department of Labor clarified that if an individual is eligible to receive at least one dollar ($1) of underlying benefits for the claimed week, the claimant will receive the full $600 FPUC.  Please direct questions about partial benefits calculation formulas to your state unemployment department.

Can an employee just quit work and get these new expanded benefits?
Generally, individuals who voluntarily quit are ineligible for UI benefits. It’s possible that an employee with a reasonable good faith belief that their workplace is unsafe (e.g., coworkers have tested positive for COVID-19 and their employer is not abiding by CDC guidelines or the employee is high risk for infection or immunocompromised) could assert that they quit because of COVID-19 related issues and may qualify for PUA. Ultimately the state, and not the employer, determines employee eligibility. However, employers may contest an employee’s unwarranted unemployment benefit claim and the employee will be required to demonstrate their eligibility to receive unemployment compensation.

Help! I’m a non-profit reimbursing employer! What do I do?
The CARES Act provides for some potential flexibility for reimbursement payments. Please contact your state unemployment office for more information.

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