Unemployment Compensation the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) March 27, 2020

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Unemployment Compensation the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) March 27, 2020 Unemployment Compensation The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) March 27, 2020 The Bipartisan Policy Center (BPC) and the who must stay home to care for children due to Committee for Economic Development (CED) of the closure of K-12 schools, Congress temporarily The Conference Board worked together to expanded the unemployment compensation produce this summary of the unemployment program in an effort to provide compensation to compensation provisions included in the individuals who have been impacted by the Coronavirus Aid, Relief, and Economic Security Act COVID-19 national emergency and to supplement (the CARES Act) specifically for child care the ability of state unemployment programs to providers. support the influx of applicants. It is our hope that this brief may be helpful to CARES Act: Unemployment Relief for Workers those in the child care field who may need to Affected by the Coronavirus access unemployment compensation at this time. State Agreements. Because each state operates Unemployment Compensation Support for Child its own unemployment compensation program, Care Providers the unemployment compensation changes under the CARES Act will require each state (or territory) Federal law provides broad guidelines for states to to enter into an agreement with the U.S. administer unemployment compensation Department of Labor in order to receive federal programs. This means that states individually funding to both administer the benefits and pay determine eligibility, minimum and maximum for the federal portion of the benefits as benefits, and the duration of benefits. described below. Most states pay benefits for up to 26 weeks, While it is likely, as unemployment claims however, some states offer less. For example, increase, that all states will opt-in to the Arkansas limits benefits to 16 weeks and additional unemployment assistance, it is not Michigan, Missouri, and South Carolina limit required. Because state agreements may be benefits to 20 weeks. submitted and approved at different times, and state capacity to implement the changes may While weekly benefits are related to prior differ, it is very likely that state implementation earnings, maximum benefits range from $235 per will vary. To compensate for staggered week in Mississippi to $795 per week in implementation, payment of benefits will be Massachusetts. On average, unemployment retroactive. compensation replaces about 40 percent of a worker’s pay.1 In addition, the U.S. Department of Labor is instructed to establish a process for making In general, state unemployment compensation assistance available for weeks beginning on or programs do not cover the self-employed. In after January 27, 2020, and before the date of addition, states generally exclude those who are enactment of the CARES Act. unable to work from receiving unemployment. Given the extraordinary nature of the effort to Eligibility. In general, everyone eligible through curb community spread of COVID-19 as well as the state rules plus those who are self-employed, impact of COVID-19 on those who have become independent contractors, or who were unable to sick, who must care for a sick family member, or start a new job or contract due to the COVID-19 pandemic will receive unemployment earnings so that there is no incentive to stay compensation through their state program or home (and not work). through the new federal Pandemic • At this time with COVID-19 community Unemployment Compensation program for those spread, many governors and community who don’t qualify for state assistance. A detailed leaders have ordered all nonessential list of those who are eligible for the new federal workers to stay home. Businesses have benefit is included at the end of this document. closed and many have laid people off during this uncertain time. Congress provided the Benefits. Individual benefits for those who receive $600 per week to supplement state benefits assistance under their state unemployment so that people would stay home and not program will continue to vary. However, seek work, an important health policy that regardless of the state, an additional $600 per overrides the original purpose of state week in temporary federal Pandemic unemployment compensation programs Unemployment compensation will be added to that were designed with the intent to their weekly benefit amount. motivate recipients to look for work. For those who are not currently eligible for state Duration of Unemployment Compensation. All programs, the temporary federal Pandemic states are eligible to offer an additional 13 weeks Unemployment Compensation program will fund of unemployment compensation through states to pay both a base benefit based on December 31, 2020, to individuals applying for earnings and rules from their state plus the $600 assistance. The additional $600 per week, weekly supplement. however, currently ends after July 31, 2020. The total number of weeks for which an individual Receipt of the $600 weekly unemployment may receive assistance shall not exceed 39 weeks. supplement will not affect eligibility for Medicaid Expediting the Receipt of Unemployment or State Children’s Health Insurance Programs. Compensation. Many states have a one-week waiting period that delays the receipt of States can pay both regular benefits and the $600 unemployment benefits for applicants. In order to weekly supplement in the same check or may expedite the receipt of benefits, the federal separate payments, however, they must be paid government will fully cover the cost of the first the same week. week of unemployment compensation through December 31, 2020, for states that choose to The implementation of these benefit changes waive their current one week-delay. depends on states entering into an agreement with the U.S. Department of Labor as previously Unemployment Taxation. Unemployment mentioned. compensation, similarly to wages, is subject to taxation. Why did Congress increase weekly benefits by $600? How do people apply for either their state unemployment compensation program or the There were several reasons why Congress new federal Pandemic Unemployment supplemented state unemployment programs. Compensation Program? • Unemployment compensation is a system that is designed to pay a base level of State agencies that operate unemployment benefits as determined by each state, which compensation programs will administer all is limited and at a level that incents seeking benefits. In other words, state labor departments employment. Generally, states provide will be a one-stop shop where individuals can benefits that are lower than an individual’s apply for regular state unemployment compensation or the new federal Pandemic Unemployment Compensation Program. 2 To find your state’s unemployment individuals to repay the amounts of such compensation agency: compensation, except that the State agency may waive such repayment if it determines that: https://www.careeronestop.org/LocalHelp/Unem ploymentBenefits/find-unemployment- • the payment of such federal Pandemic benefits.aspx Unemployment Compensation was without fault on the part of any such individual; and To find your state’s minimum and maximum • such repayment would be contrary to weekly unemployment benefits: equity and good conscience. Opportunity for a Hearing. No repayment shall be https://oui.doleta.gov/unemploy/content/sigpros required, and no deduction shall be made, until a /2020-2029/January2020.pdf determination has been made, notice made and an opportunity for a fair hearing has been given to Short-Time Compensation Programs. Some the individual, and the determination has become workers may not be laid off. Instead, their hours final. may be reduced. States interested in setting up Short-Time Compensation (STC) programs, also Any determination by a State shall be subject to referred to as work-sharing programs, allow review in the same manner and to the same employers to enter into an agreement with state extent as determinations under the State labor departments to reduce hours instead of unemployment compensation law. laying people off which would enable eligible workers to receive partial unemployment benefits Next Steps. As more guidance is released from the to help fill the gap. Currently, 27 states have STC U.S. Department of Labor, BPC and CED will programs, which are designed to avoid lay-offs provide additional updates. States interested in 2 and are completely funded by states. Under the participating in the federal Pandemic CARES Act, the federal government would Unemployment Compensation program will need temporarily provide funding for interested states. to have agreements in place that are approved by Rules will be forthcoming from the Department of the U.S. Department of Labor before Labor. implementing any of the changes. Such agreements may depend on additional A brief overview of STCs is located: clarifications from the department. https://oui.doleta.gov/unemploy/docs/stc_fact_s heet.pdf In the meantime, a more detailed description of Fraud and Overpayments. If an individual those individuals who will qualify for the new knowingly has made a false statement or federal Pandemic Unemployment Compensation representation of a material fact that leads to an Program follows. These definitions are from the individual receiving unemployment compensation CARES Act statute. in an amount to which the individual is not entitled, the individual: • will be ineligible for further federal Pandemic Unemployment Compensation, and • shall
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