Within the last two weeks, many laws, orders and guidance have been approved and published regarding the administration of unemployment and employee financial relief. We discuss below the U.S. Department of Labor’s (DOL) guidance providing clarity to states on how to administer the expanded unemployment benefits under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) and the Executive Order issued regarding COVID-19 Support Payments.
DOL Guidance Regarding the Pandemic Emergency Unemployment Compensation Program
On April 10, 2020, the DOL published its third Unemployment Insurance Program Letter (UIPL) 17-20, which provides further guidance to state governments as they implement the CARES Act, including the Pandemic Emergency Unemployment Compensation (PEUC) program. This supplements the guidance issued in UIPL No. 15-20 and 16-20.
UIPL No. 15-20 clarifies the Federal Pandemic Unemployment Compensation (FPUC) provision of the CARES Act, under which eligible individuals will receive $600 per week, in addition to the weekly benefit amounts they are otherwise eligible to receive for weeks of unemployment ending on or before July 31, 2020.
Who is eligible for the extra $600 payment?
Individuals receiving regular unemployment compensation (UC) under state programs including, but not limited to the PEUC; Pandemic Emergency Assistance (PUA); Extended Benefits; Disaster Unemployment Assistance; and payments under the Self-Employment Assistance program are eligible.
When is the extra $600 payment available?
This payment is available from the week of unemployment starting on or after the date in which South Carolina, or any other state, enters into an agreement with the DOL, through the week of unemployment ending on or before July 31, 2020. Governor Henry McMaster signed an agreement on March 28, marking the start of the benefit payout period for South Carolina. If South Carolina is unable to immediately pay FPUC benefits in the week following the execution of its agreement with the DOL, then it must provide retroactive payments to those eligible for FPUC.
UIPL No. 16-20 provides guidance on the PUA provision of the CARES Act.
Who is eligible for PUA benefits?
PUA expands unemployment benefits to certain workers who are not customarily entitled to unemployment insurance (UI) benefits under state law, including self-employed individuals, independent contractors or those who have exhausted regular unemployment benefits. Other examples of “qualifying COVID-19 related circumstances” for PUA eligibility include:
- An individual who is a caregiver of a child unable to attend school due to COVID-19 closures;
- An individual unable to reach their place of employment because it violates a state’s stay-at-home order that was instituted to combat the spread of COVID-19;
- An individual who has quit a job as a direct result of COVID-19 because the individual has been diagnosed with COVID-19 and continuing work activities is not possible by virtue of the diagnosis or condition;
- An individual whose immune system is compromised by a serious health condition and he or she has been advised by a health care provider to self-quarantine in order to avoid the greater-than-average health risks the individual might face if he or she were to become infected; and
- An individual who works as an independent contractor with reportable income and is unemployed, partially employed, or unable or unavailable to work because the COVID-19 pandemic has severely limited his or her ability to continue performing customary work activities, thereby forcing the individual to suspend such activities.
How will PUA claims be processed and administered?
These claims are subject to the same filing and determination process as typical UI benefits to the South Carolina Department of Employment and Workforce (SCDEW). When processing PUA claims, the state will be required to verify that individuals are not entitled to regular unemployment insurance benefits. If an individual’s eligibility for regular unemployment is uncertain, then the state must first require the individual to file an initial claim for regular unemployment insurance. If the individual is subsequently disqualified from regular benefits, then the state may consider the individual for PUA eligibility.
Under the PEUC program, according to UIPL 17-20, states can provide up to 13 weeks of federally-funded benefits to qualified individuals who:
- have exhausted all rights to regular compensation under state law or federal law with respect to a benefit year that ended on or after July 1, 2019;
- have no rights to regular compensation with respect to a week under any other state UC law or federal UC law, or to compensation under any other federal law;
- are not receiving compensation with respect to a week under the UC law of Canada; and
- are able to work, available to work and actively seeking work, although states must offer flexibility on “actively seeking work” where there are COVID-19 impacts and constraints.
COVID-19 Support Payments
On April 8, 2020, Governor Henry McMaster issued Executive Order 2020-22, providing employers the opportunity to make voluntary COVID-19 Support Payments to employees, who also may receive UI benefits, to offset the financial impact of employees being furloughed. Typically, payments of this kind would affect the employees’ eligibility for UI benefits but in this case, the Governor’s Executive Order provides a break for COVID-19 Support Payments.
Employers that are considering making this COVID-19 Support Payment MUST submit the plan to SCDEW prior to making any payments. The form can be submitted electronically to firstname.lastname@example.org. Submitting the plan and obtaining approval before any payments will ensure the payments are not considered “wages” under SC law. Conditions for the payments to fall within the Order are as follows:
- The payment must be made in response to furloughing the employee.
- The payment must be for services rendered by the employee in the past.
- The employee (or the employee’s estate) must not be obligated to repay the payment under any circumstances.
- The payment must not obligate the employee to perform or not perform any act in connection with the individual’s status as an employee.
Employers do not have to wait on approval from SCDEW before proceeding with COVID-19 Support Payments, but failing to submit the plan to SCDEW or not complying with the Executive Order may affect the employees’ eligibility for UI benefits.
For additional resources on COVID-19, please access HSB’s resource page.