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March 30, 2020

Stroock Special Bulletin

By: Howard S. Lavin, Elizabeth E. DiMichele

The Coronavirus Aid, Relief and Economic Security Act, or ‘‘CARES Act,” was signed into law on Friday, March 27, 2020. One component of the $2 trillion law provides federal funding for expanded unemployment insurance coverage and increased benefits available to individuals whose job or ability to work was impacted by COVID-19.  Significantly, the CARES Act provides for assistance to certain individuals who are typically excluded from receiving unemployment benefits.

Pandemic Unemployment Compensation

The CARES Act provides for a weekly payment of $600 in addition to the unemployment benefits to which an individual is entitled (“Pandemic Unemployment Compensation”).  Pandemic Unemployment Compensation is a flat amount, fully funded by the federal government, and will be available through July 31, 2020. Pandemic Unemployment Compensation is intended to provide full wage replacement for the average worker in the United States and is not subject to reduction if it exceeds the wages actually earned by the individual prior to becoming eligible for unemployment benefits.

Pandemic Unemployment Assistance

The CARES Act extends emergency assistance to individuals who are not otherwise eligible for unemployment benefits.

Covered Individuals

The CARES Act generally provides for Pandemic Unemployment Assistance to individuals who are unemployed, partially unemployed, or unable to work due to COVID-19, and are not otherwise eligible for unemployment benefits.

Covered individuals include those who:

  • have been or have had a household member diagnosed with COVID–19 or are experiencing symptoms of COVID–19 and seeking a medical diagnosis;
  • are providing care for a family or household member who has been diagnosed with COVID–19;
  • have primary caregiving responsibility for a child who is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work;
  • are unable to reach work because of a quarantine imposed as a direct result of the COVID-19 public health emergency or self-quarantine advised by a health care provider;
  • were scheduled to commence employment and do not have a job or are unable to reach the job as a direct result of the COVID-19 public health emergency;
  • have become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID–19;
  • had to quit their job as a direct result of COVID–19;
  • worked in a place of employment that is closed as a direct result of the COVID–19 public health emergency; or
  • meet any additional criteria established by the Secretary of Labor for unemployment assistance.

Broad Application of Pandemic Unemployment Assistance

Significantly, a person that is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular unemployment or extended benefits, including because they have exhausted their benefits, and meets the foregoing criteria is eligible for Pandemic Unemployment Assistance. Thus, “gig” workers, independent contractors, and others who are typically excluded from unemployment insurance coverage are eligible for Pandemic Unemployment Assistance.

Exclusions from Coverage

An individual is not eligible for Pandemic Unemployment Assistance if:

  • the individual has the ability to telework with pay; or
  • the individual is receiving paid sick leave or other paid leave benefits.

Application

Pandemic Unemployment Assistance is available retroactively to covered individuals for up to 39 weeks beginning on or after January 27, 2020, and ending on or before December 31, 2020, as long as such unemployment, partial unemployment, or inability to work is caused by COVID-19.  The 39-week cap includes any week for which the covered individual received regular compensation or extended benefits under any federal or state law and is subject to automatic extension equal to the number of weeks that any extended benefits may be extended.[1]

Generally, the weekly amount of Pandemic Unemployment Assistance is the applicable state weekly benefit amount, which cannot be less than the minimum amount available under the Disaster Unemployment Assistance program, plus the Pandemic Unemployment Compensation payment of $600, discussed above, and any applicable increases.

The CARES Act also provides for federal reimbursement to states that waive any waiting period before an individual can receive unemployment benefits.

Pandemic Emergency Unemployment Compensation

The CARES Act provides for up to 13 weeks of emergency unemployment benefits for eligible individuals who remain unemployed after exhausting their rights to unemployment benefits under state law.

Expansion of Work Sharing Programs
The CARES Act also provides funding for states that have Short-Time Compensation programs and financial incentives for states to adopt such programs where they do not already exist.  Short-Time Compensation – also known as Work-Sharing – programs are voluntary agreements between employers and their state unemployment office to avoid layoffs by reducing employee hours. The employees, in turn, are eligible for prorated unemployment benefits.

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For More Information:

Howard S. Lavin

Elizabeth E. DiMichele

[1] Generally, extended benefits refers to additional weeks of unemployment benefits available to workers when a state is experiencing high unemployment.

This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.