Authored by: Dean R. Dietrich
As you know, Congress has passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) which is an intended stimulus package in response to the virus pandemic. Included in the CARES Act are provisions that provide for a significant expansion of unemployment insurance benefits. There are three (3) federally funded Programs – Pandemic Unemployment Compensation, Pandemic Emergency Unemployment Compensation, and Pandemic Unemployment Assistance Programs which are part of the new federal law. At this time, there is very little specific information about how all of these Programs will be applied in individual settings; however, it appears that the new Programs will provide a very expanded unemployment compensation benefit for those employees who are laid-off (furloughed) from employment due to the Coronavirus.
Here is what we know so far:
- The Pandemic Unemployment Compensation Program provides a substantially increased unemployment insurance benefit to qualified employees. Individuals are eligible and will receive an additional $600 per week which is funded by the federal government for the next four (4) months which is being funded through July 31, 2020. This payment will be in addition to the weekly benefit that is authorized under state law. The additional payment will be made at the same time but it may be from a different check.
- The $600 weekly unemployment compensation supplement is a flat amount that will be distributed to all individuals receiving full unemployment benefits and individuals who would be receiving partial unemployment benefits based upon the employees pay rate.
- The Pandemic Emergency Unemployment Compensation Program provides for the extension of state unemployment benefits for an additional 13-weeks after the employee has exhausted all regular state unemployment compensation benefits. In Wisconsin, this means that employees will be eligible for unemployment benefits for a period of 39-weeks. The $600 supplement will run through July 31, 2020, but this extension of benefits will run beyond that date depending upon when the employee applies for unemployment.
- The Pandemic Unemployment Assistance Program extends federal unemployment assistance to employees who generally are not eligible for state unemployment benefits, such an independent contractors, self-employed individuals and an employee with a limited work history. These benefits apply if the employee has been diagnosed with the Coronavirus, is experiencing symptoms of the Coronavirus or is unable to work due to a quarantine. The extended benefits would also apply to employees who are providing care to a member of their household who has been diagnosed with the virus or have a child who is unable to attend school because it is closed. The benefit would also apply to employees who were scheduled to begin work but were no longer able to start work or are forced to quit their job because of the Coronavirus. This benefit would also apply to those employees who have their place of employment closed as a direct result of the Coronavirus. All of these extended benefits apply to those individuals who normally would not be eligible for unemployment benefits such as an independent contractor.
- The Act eliminates the one-week waiting period that would normally apply to any individual seeking unemployment benefits. The State of Wisconsin is considering legislation to eliminate the one-week waiting period; however, this new federal act may take care of that situation immediately.
- The new federal law will provide full funding to states for workshare programs where an employer voluntarily enters into an agreement with the state to prevent the layoff of employees by reducing employee hours. How this provision may apply in Wisconsin is still being reviewed.
- There is a provision in the CARES Act that provides an employer with certain relief, in the form of loan forgiveness if an employer seeks to borrow money from the Small Business Administration (“SBA”) to continue the regular salary and benefits for its employees. It is not clear how this Program will be administered or whether it will apply to local government units. Initially, the business will receive a loan from the SBA with a four percent (4%) interest charge, but the business may show that the monies were used to continue salary for employees and then loan forgiveness will be determined as part of the processing of the loan. Employers must keep track of any and all expenses that it incurs in continuing the salary of employees who are not actually working at the time.
- The Act also provides a refundable payroll tax credit for those employers whose receipts decrease by more than 50 percent compared to last year or whose business operations were closed or partially closed due to the Coronavirus Crisis. The details of this payroll tax credit will depend upon the specifics of the size of the employer and will require further clarification from the federal government.
The above is designed to give you some specific oversight regarding the potential for unemployment insurance benefits being increased for your employees. In some instances, your employee will be eligible for more revenue from this benefit than the employee would earn if the employee continued working. This is something that must be factored into any consideration regarding a reduction in force or continuation of pay for employees. More information will be sent when it becomes available.
