Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, states can now provide expanded unemployment insurance benefits in multiple scenarios related to COVID-19. We offer answers to your frequently asked questions and dive into how the CARES Act affects unemployment benefits for nonprofits and their workers.
A. Overview of Unemployment Benefits and Expansion Under the CARES Act
Question 1: What is unemployment insurance?
Unemployment insurance is a joint program between the federal and state governments set up generally to provide money to people who are trying to get a job but cannot find one and are therefore unemployed. Insurance benefits are funded through state and federal unemployment taxes, although all nonprofits are exempt from federal unemployment taxes. Unemployment benefits have been considerably enhanced by the CARES Act passed by the federal government.
Question 2: How does the COVID-19 outbreak affect unemployment insurance?
The newly enacted federal Coronavirus Aid, Relief, and Economic Security (CARES) Act authorizes states to amend their laws to provide unemployment insurance benefits in multiple scenarios related to COVID-19. Specifically, the CARES Act provides states flexibility to pay benefits if:
- An employer temporarily ceases operations due to COVID-19, preventing employees from coming to work;
- An individual is quarantined with the expectation of returning to work after the quarantine is over; and
- An individual leaves employment due to a risk of exposure or infection or to care for a family member.
In addition, federal law does not require an employee to quit in order to receive benefits, but also will not preclude benefits when an employee resigns due to COVID-19’s impact.
Question 3: What forms of unemployment assistance are offered under the CARES Act?
In brief, the CARES Act provides an extension of benefits up to a maximum of 39 weeks and an additional $600 a week until July 31.
More specifically, the Pandemic Unemployment Assistance (PUA) program (Section 2102 of the CARES Act) provides up to 39 weeks of benefits to individuals who are otherwise able 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 due to COVID-19 reasons starting on or after January 27, 2020 and continuing through December 31, 2020.
Another important form of relief is the Pandemic Emergency Unemployment Compensation (PEUC) program (Section 2107 of the Cares Act), which provides up to 13 weeks of benefits for individuals who have exhausted regular unemployment compensation entitlements or are not eligible for such entitlements, including clergy and those working for religious organizations. PUEC is available for weeks of unemployment beginning after the state signs an agreement with the Department of Labor and ending December 31, 2020.
Additionally, short-time Compensation (STC) (Sections 2108-11 of the CARES Act) is a lay-off aversion program and authorizes partial unemployment benefit payments for individuals whose employers reduce hours rather than lay off employees. These benefit payments are available for a maximum of 26 weeks beginning on or after March 27, 2020 and ending on or before December 31, 2020.
The Federal Pandemic Unemployment Compensation (FPUC) program (Section 2104 of the CARES Act) builds on other unemployment benefits through providing $600 per week to individuals who are collecting regular unemployment compensation, PUA benefits, PEUC benefits, and STC benefits. This additional weekly amount is available for weeks of unemployment beginning after the date on which the state enters into an agreement with the Department of Labor through the week of unemployment ending on or before July 31, 2020.
B. Eligibility for Unemployment Benefits
Question 4: Who eligible for regular unemployment compensation?
Each state sets its own unemployment insurance benefits eligibility guidelines, but an individual usually qualifies if he or she:
- is unemployed through no fault on the individual’s part. In most states, this means the individual must have separated from his or her last job due to a lack of available work;
- meets work and wage requirements. The individual must meet applicable state’s requirements for wages earned or time worked during an established period of time referred to as a “base period.” For most states, the base period is usually the first four out of the last five completed calendar quarters before the claim for benefits is filed; and
- meets additional state requirements.
Question 5: Who is eligible for unemployment benefits under the CARES Act?
PUA covers individuals who are self-employed, seeking part-time employment, lacking sufficient work history or would not otherwise qualify for regular unemployment compensation or extended benefits under state or federal law, including those who have exhausted all rights to such benefits. Depending on state law, covered individuals may also include clergy and those working for religious organizations who are not covered by regular unemployment compensation.
More recent guidance issued by the DOL clarifies that benefits will be extended to those who: (1) have recently attached to the labor force, such as individuals who had a bona fide job offer to start work on a specific date and were unable to start due to one of the COVID-19 related reasons; (2) do not have sufficient wages in covered employment during the last 18 months to establish a claim for regular unemployment compensation; or (3) become (or became) unemployed or partially employed due to COVID-19 related reasons.
PEUC covers individuals who have exhausted all rights to regular unemployment compensation under state or federal law or have no other legal right to such compensation. Individuals must also be able and available to work and actively seeking work, although states must provide flexibility in meeting the “actively seeking work” requirement when individuals are unable to search for work because of COVID-19 (e.g., illness or quarantine).
STC covers individuals who are working reduced hours to avoid a layoff.
Finally, the additional $600 weekly benefit under the FPUC program is available for individuals who are no longer working through no fault of their own, but such individuals must be able and available to work.
Question 6: Are temporary or seasonal workers eligible for unemployment benefit payments?
Possibly. PUA benefits are available for individuals who do not have a job because the employer with whom the individual was scheduled to commence employment has rescinded the job offer as a direct result of the COVID-19 public health emergency. The additional $600 under the FPUC program should also be available (but only through July 31, 2020).
Question 7: Are part-time employees eligible for enhanced benefits?
Yes, part-time employees should be eligible for PUA, as well as the full $600 under the FPUC program.
Question 8: If an employee is part-time but has a full-time job elsewhere, will the employee be eligible for unemployment benefit payments if laid off from the part-time employment only?
Yes, the employee would be eligible for partial unemployment insurance. The formula for figuring out how much aid she can get varies by state, but she should be able to receive some financial assistance.
Question 9: Are furloughed employees eligible?
The CARES Act authorizes benefits for furloughed employees – that is, employees who are laid off temporarily and with the employer’s expectation of rehire. Please note, however, that states individually have the right to determine the specific scope of coverage.
Question 10: What is the practical difference between furloughing and laying off employees?
In employee furloughs, employees take unpaid or partially paid time off of work for a discrete period of time. The employees generally have either scheduled time off or call-back expectations. In a layoff, employees generally have no right to recall and no expectation of returning to the job. During a furlough, benefits usually continue, whereas benefits generally end for employees who are laid off on either the last day of work or at the end of the month.
For eligibility of unemployment benefits under the CARES Act, there is no practical difference between furloughing or laying off employees. Both employees who are furloughed and those who are laid off will be eligible for unemployment benefits.
Question 11: Are international employees eligible?
Benefits are not available for employees whose residences are outside of the United States or its territories.
Question 12: What about employees who can work from home, but only part-time due to a reduction in hours?
The CARES Act provides grants for short-time compensation (STC) or layoff aversion programs. Workers who have experienced a reduction in hours in lieu of a layoff may receive a partial unemployment benefit payment. These reimbursements are available for a maximum of 26 weeks beginning on or after March 27, 2020 and ending December 31, 2020. The additional $600 under the FPUC program is also available for these employees.
Question 13: What about employees who can work from home, but only part-time hours due to childcare responsibilities?
PUA is generally not payable to individuals who have the ability to telework with pay or who are receiving paid leave benefits, but individuals receiving paid leave benefits for less than their customary work week may still be eligible for a reduced PUA where primary caretaking duties require “such ongoing and constant attention that it is not possible for the individual to perform work at home.”
Question 14: Who is not eligible for PUA?
Individuals who have the ability to telework with pay and individuals who are receiving paid sick leave or other paid leave benefits for their customary work hours are not eligible for PUA.
Additionally, there are many other reasons for denying benefit payments, including:
- Voluntarily leaving a job without good cause;
- Being discharged for misconduct connected with work;
- Not being able or available for work;
- Not actively seeking work;
- Refusing an offer of suitable work; and
- Knowingly making false statement to obtain benefit payments.
C. Applying for Unemployment Benefits
Question 15: The CARES Act offers multiple benefit programs. Do unemployed workers choose among them, or is there an order of payment?
For an individual who is eligible for regular unemployment compensation, the following order of payment applies:
- The individual applies for and receives regular unemployment compensation, the amount and duration of which is determined by state law.
- If the individual exhausts unemployment compensation, the individual is eligible to receive PEUC for up to 13 weeks.
- If the individual exhausts PEUC and the state has “triggered on” an extended benefit period, the individual may be eligible to receive extended benefits up to 13 or 20 weeks, depending on the state’s unemployment rate and trigger for periods of high unemployment.
- If the state is not “triggered on” to extended benefits or the individual exhausts extended benefits, the individual may then receive PUA under Section 2104 of the CARES Act. At least one of the COVID-19 related reasons set out in Section 2102(a)(3)(A)(ii)(I) must apply for PUA eligibility. These benefits are available for up to 39 weeks, minus any weeks that the individual received regular unemployment compensation or extended benefits.
For an individual who is not eligible for regular unemployment compensation, extended benefits under state or federal law, or PEUC and who meets the requirements of Section 2102(a)(3)(A)(ii)(I), PUA is available.
The additional $600 FPUC payment is available for individuals collecting regular unemployment compensation, PEUC, extended benefits, PUA or short-time compensation. These payments are made concurrent with other unemployment benefit payments and are available for all weeks of unemployment ending on or before July 31, 2020.
Question 16: Where do employees apply?
Each state administers its own unemployment insurance program, although all states follow the same guidelines established by federal law. Claims for unemployment benefits should be filed online with the unemployment insurance program in the state where the employee was working. For Illinois workers, see the Illinois Department of Workforce Development site.
Question 17: What information is necessary to support the application?
In order to ensure timely processing, workers should be prepared to provide addresses and dates of former employment.
Question 18: What must eligible employees certify?
For PUA, individuals must self-certify that they are otherwise able and available for work within the meaning of applicable state law, except that they are unemployed, partially unemployed, or unable or unavailable to work because of the COVID-19 related reasons specified in Section 2102(a)(3)(A)(ii)(I) of the CARES Act. These reasons are listed below:
- The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- A member of the individual’s household has been diagnosed with COVID-19;
- The individual is providing care for a family member or a member of the individual’s household who has been diagnosed with COVID-19;
- A child or other person in the household for which the individual has primary caregiving responsibility 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;
- The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;
- The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;
- The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;
- The individual has to quit his or her job as a direct result of COVID-19; or
- The individual’s place of employment is closed as a direct result of the COVID-19 public health emergency.
D. Receiving Unemployment Benefits
Question 19: How much money will employees get?
For traditional unemployment benefits, the weekly benefit amount is determined by adding together the employee’s earnings in the two quarters of the base period when the employee earned the most, taking 47% of that total, then dividing the result by 26. The current maximum weekly unemployment benefit in Illinois is $471 per week. For example, let’s say Michelle had a steady job during the entire base period, earning $20,000 per year. In the highest paid two quarters, she earned $10,000 total. The state agency will take 47% of that amount ($4,700) and divide it by 26 to come up with her weekly benefit: $180 and change.
Once the CARES Act is implemented, individuals will receive a weekly benefit amount (as regular unemployment compensation, PEUC, or PUA payments) and an additional $600 each week above their state allotment beginning after the date on which the state has entered into an agreement with DOL until July 31, 2020.
If the individual is eligible to receive at least $1 of underlying benefits for the claimed week, the individual should receive the full $600 FPUC.
Question 20: When will benefit payments start?
It generally takes two to three weeks after a claim is filed to receive the first benefit check. Some states also require a one-week waiting period; in other words, the claimant would receive his or her first payment for the second week of the unemployment claim.
Notably, PUA claims are effective the week filed and must be backdated to the first week during the pandemic assistance period (February 2, 2020 through December 26 or 27, 2020) in which the individual meets the definition of a covered individual.
Question 21: How long will benefits be paid?
For regular unemployment benefits, the duration of payments in determined by state law. In Illinois, benefits are available for up to 26 weeks.
PUA benefits are paid for a maximum of 39 weeks, retroactively from January 27, 2020 through December 31, 2020. The DOL has cautioned that individuals should bear in mind that many of the qualifying circumstances for PUA benefits are likely to be of short-term duration. For instance, an individual who has been advised to self-quarantine by a health care provider because of exposure to a person who tested positive for the coronavirus and is therefore unable to reach his or her place of employment may be able to return to his or her place of employment within two weeks of exposure. Similarly, a school is not closed as a direct result of the COVID-19 public health emergency after the date the school year was originally scheduled to end.
The $600 FPUC benefit is payable beginning on or after the date on which the state enters into an agreement with the U.S. Department of Labor and continues through the end of July.
Question 22: May the employer require an employee to use accrued paid leave rather than apply for unemployment benefits?
Yes, if the employee has available paid leave, he or she is not eligible for PUA.
Question 23: May an employer send employees home and instruct them to be available for work during their regularly scheduled hours and, alternatively, permit them to take leave without pay?
Yes, but unemployment benefits are available for employees paid for less than their customary work week.
Question 24: How does a furlough impact paid leave rights?
It depends on state law. Some states may view even temporary furlough as termination of employment, effectively triggering final pay obligations. The California Division of Labor Standards Enforcement (“DLSE”), for instance, takes the position that a temporary layoff will constitute a termination except where the layoff does not exceed 10 days and there is a definite date given for returning to work within the normal pay period. Because California law requires that all accrued vacation be paid at the time of “termination,” a temporary lay-off extending beyond 10 days will trigger an obligation to pay final wages, including accrued vacation. Such a rule could have significant implications for California businesses, as an employer’s willful failure to timely pay final wages can result in waiting time penalties under Labor Code Section 203, which are calculated as a day’s wage for every day final wages are not paid, up to 30 days.
Question 25: What if the employee quits?
While the CARES Act provides a great deal of flexibility, interim guidance expressly notes that quitting work without good cause (i.e., non-COVID-19 related reasons or other good cause) to obtain additional benefits is considered fraud. Individuals who obtain benefits through fraud are ineligible for future payments, must pay back benefits received, and are subject to prosecution under 18 U.S.C. § 1001.
Question 26: Is there any condition for continuing to receive benefits?
Normally those receiving benefits would have to check in with their state agency every week to let administrators know they remain out of work as well as what job searches they’ve done.
Of note, the CARES Act authorizes maximum flexibility in interpreting what exactly constitutes “actively seeking work” during the COVID-19 crisis, but it is unclear what, if anything, states will require. Moreover, PUA is tied to a COVID-19 related reason, many of which may be of short-term duration. States may require a certification of the ongoing nature of the COVID-19 related reason for loss of employment or unavailability for work.
E. Employer Aspects of Unemployment Benefits
Question 27: What is the employer’s liability for employees collecting unemployment benefits?
Employers have no liability for the $600 benefit payment issued under the FPUC program, and some states are waiving employer charges for all COVID-19 related claims when employers file claims on behalf of their employees.
Question 28: What if my nonprofit organization opted out of paying into the state’s unemployment insurance program, participating instead as a reimbursable (self-insured) employer?
The DOL is expected to issue guidance that allows states to interpret their state unemployment compensation laws in a manner that would provide maximum flexibility to reimbursing employers as it relates to timely payments in lieu of contributions and assessment of penalties and interest.
Additionally, Section 2103 of the CARES Act provides for transfers to a state’s account in the unemployment trust fund from the Federal Unemployment Account to provide partial reimbursements (generally 50 percent of the amount of payments in lieu of contributions) to certain nonprofit organizations for weeks of unemployment between March 13, 2020 and December 31, 2020. These partial reimbursements apply to all payments made during this time period, even if the unemployed individual is not unemployed as a result of COVID-19.
Question 29: What if my nonprofit organization does not participate in the state’s unemployment insurance program, as a church, church-controlled religious organization, or nonprofit with less than four employees?
Recent guidance from the U.S. Department of Labor supports employee eligibility for COVID-19-related unemployment benefits without regard to an employer’s lack of participation in state unemployment insurance programs, and without any resulting employer liability for the employee’s benefits. More specifically, the DOL’s Program Letter 16-20 states as follows:
The CARES Act includes a provision of temporary benefits for individuals who have exhausted their entitlement to regular unemployment compensation as well as coverage for individuals who are not eligible for regular unemployment compensation . . . . These individuals may include . . . clergy and those working for religious organizations who are not covered by regular unemployment compensation, and other workers who may not be covered by the regular unemployment compensation program under some state laws.
Nonprofits therefore should check specific state unemployment agency websites for more information. Note too that additional state-provided unemployment guidance may be forthcoming (with no such guidance yet in Illinois, as of April 16, 2020), as the legal landscape continues to evolve rapidly for COVID-19-related matters including unemployment benefits.