DOL Clarifies Unemployment Benefits in New Letters

Over the last few weeks, employers across the county have had to grapple with an onslaught of new legislation at both the state and federal level. As part of its implementation of the new federal employment law mandates, the U.S. Department of Labor (DOL) has provided two new Unemployment Insurance Program Letters (UIPL) concerning unemployment benefits. We explore the DOL's guidance below.

UIPL 15-20: Payment of Benefits under Federal Pandemic Unemployment Compensation

In UIPL 15-20, the DOL explains the Federal Pandemic Unemployment Compensation (FPUC). This provision is in Section 2104 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which went into effect on March 27, 2020.

The FPUC allows states to provide eligible individuals with a weekly payment of $600.00. This payment is in addition to benefits already provided through regular unemployment compensation programs such as the Unemployment Compensation for Federal Employees (UCFE) and Unemployment Compensation for Ex-Servicemembers (UCX). Other eligible programs under the FPUC include the Pandemic Emergency Unemployment Compensation (PEUC); Pandemic Unemployment Assistance (PUA); Extended Benefits (EB); Short­Time Compensation (STC); Trade Readjustment Allowances (TRA); Disaster Unemployment Assistance (DUA); and the Self-Employment Assistance (SEA) program.

Payments under this provision were made contingent on the execution of a signed agreement between the DOL and the respective states, and as of March 28, 2020, all states have executed agreements in place with the DOL. The timeline for these payments varies by state, with no clear guidance yet on when the payments are expected to start. As states begin providing payments, eligible individuals will receive retroactive payments going back to either their date of eligibility or signing of the state agreement—whichever came later. According to the CARES Act, the FPUC benefit payments will end after payments for the last week of unemployment before July 31, 2020.

States continue to work with the DOL in implementing this new initiative. Illinois, for example, has posted some guidance stating that benefits already paid will not be retroactively applied to unemployment benefits already received. However, Illinois also goes on to state that in many cases, individuals will also be eligible for additional weeks of unemployment pay beyond the 26 weeks provided under regular unemployment rules, with benefits to be applied automatically to eligible individuals. As more information becomes available, it is expected that states will continue to post their own guidance concerning the applicability of additional benefits.

UIPL 16-20: Guidance to States Concerning Pandemic Unemployment Assistance

Letter 16-20 provides clarification to states about the implementation of the Pandemic Unemployment Assistance (PUA) program, which is found in Section 2102 of the CARES Act. The PUA provides benefits to individuals who are normally ineligible to collect unemployment benefits—e.g. self-employed workers, independent contractors, and gig workers—who are unable to work as a result of COVID-19-related reasons.

The PUA provides up to 39 weeks of benefits to qualifying individuals who are otherwise able to work and available for work within the meaning of applicable state law, except that they are unemployed, partially unemployed, or unable or unavailable to work due to COVID-19-related reasons, as defined in the CARES Act. Benefit payments under PUA are retroactive for weeks of unemployment, partial employment, or inability to work 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.

Eligibility for PUA includes individuals who are ineligible for regular unemployment compensation or extended benefits under state or federal law or PEUC—including those who have exhausted all rights to such benefits. Covered individuals further include those who are self-employed, seeking part-time employment, or lacking sufficient work history. Depending on state law, covered individuals may also include clergy and those working for religious organizations who are not covered by regular unemployment compensation.

Because of the novelty of this legislation, many states have yet to post guidance. Over the new few weeks, however, it is expected that states will be able to provide additional information for individuals normally unable to collect unemployment benefits. The key to this guidance is that the individual must be able to work and available to work within the meaning of the applicable state law. Therefore, it is not enough to be without work; an individual must be ready to rejoin the workforce once work becomes available.

Many employers continue to ask about whether their rates will increase as a result of COVID-19-related unemployment claims, but it remains unclear whether rates will increase or not.