NOTE: The information in this Alert is current as of April 7, 2020, 8:00 am Central Time. This is a rapidly-evolving situation and circumstances and guidance may change.
President Trump signed The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law on March 27, 2020. The CARES Act provides $2.2 trillion of support for families and businesses, partially through additional unemployment benefits, some of which will be available through July 31, 2020 and some of which will be available through December 31, 2020 due to COVID-19. This Alert provides a summary of the unemployment insurance benefits available within the CARES Act and refers to Minnesota unemployment benefits as an example; employers who operate outside of Minnesota should check the applicable state employment office for relevant information.
As set forth in more detail below, the CARES Act increases and expands current state unemployment insurance benefits by:
- Providing for an additional $600 weekly payment;
- Extending unemployment benefits for an additional thirteen weeks;
- Including individuals who might otherwise be ineligible for unemployment benefits under normal circumstances; and
- Covering 100% of states’ short time or shared work unemployment compensation.
These additional benefits are funded at the Federal level, but will be managed at the state level. Minnesota will implement these benefits once additional guidance is received from the Department of Labor, but Minnesota expects the benefits to be available by the end of April and the additional $600 weekly payment will be back-paid to the week of March 29, 2020. Governor Walz already waived the eligibility waiting period so unemployed workers are eligible for benefits immediately upon losing employment. The Minnesota Unemployment Insurance updates can be accessed here.
Additional $600 Weekly Payment: Federal Pandemic Unemployment Compensation
The CARES Act provides a $600 weekly payment in addition to the unemployment benefits which an individual receives pursuant to state law. It is intended to provide full wage replacement for the average worker and is not subject to reduction if it exceeds the wages actually earned by the individual prior to becoming eligible for unemployment benefits. This weekly payment will be available through July 31, 2020.
The Minnesota Unemployment Insurance website states that eligible individuals will receive the $600 weekly payment in back-pay to the week of March 29, 2020 once available and that the $600 weekly payment will be paid separately.
Additional Thirteen Weeks of Unemployment: Pandemic Emergency Unemployment Compensation
The CARES Act provides an additional thirteen weeks of unemployment benefits once an individual exhausts the 26 weeks generally provided by state law, for those individuals who are able to work, available to work, and are actively seeking work. These extended benefits will be paid at the same weekly rate the individual is otherwise eligible to receive under state law and will be available through December 31, 2020. Qualifying workers will also be eligible to receive the $600 weekly payment during the additional thirteen-week period through July 31, 2020. States must offer flexibility in meeting eligibility requirements related to “actively seeking work” if an applicant’s ability to do so is impacted by COVID-19.
Unemployment for Those Generally Ineligible: Federal Pandemic Unemployment Assistance
The CARES Act provides benefits for individuals who are self-employed, seeking part-time employment, or who otherwise would not qualify for unemployment benefits under state or Federal law, such as “gig” workers, freelancers, and independent contractors. To be eligible, individuals must demonstrate that they are otherwise able to work 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 COVID-19. The individual is eligible for up to 39 weeks of unemployment compensation with state benefits from January 27, 2020 through December 31, 2020 as well as the $600 weekly payment through July 31, 2020, as long as the unemployment, partial unemployment, or inability to work caused by COVID-19 continues. Ineligible individuals include those who can telework with pay, who are already receiving paid leave under their employer’s plans or policies, who are already receiving paid leave under an applicable Federal, state or local law, and new entrants to the workforce who cannot find employment.
The Minnesota Unemployment Insurance website states that those who are eligible for this assistance should apply for regular unemployment benefits and provides a special guide for self-employed individuals for them to qualify for these benefits quicker once available, which may be accessed here.
Short Time or Shared Work Benefits
Short time or shared works benefits are an alternative to layoffs, which allow employers to retain experienced employees, avoid future hiring and training expenses, and avoid a layoff which creates financial stability for the workforce and goodwill in the community. Employers divide available work amongst a group of employees so the employees are retained at a reduced schedule and receive partial unemployment benefits to offset their reduced wages under the state short time or shared work programs. The Federal government will cover 100% of the unemployment compensation paid under existing state programs. The CARES Act also creates incentives for states that have not yet created programs to do so. These benefits are available through December 31, 2020. Individuals receiving benefits under the shared work program also are eligible for the additional $600 weekly payment through July 31, 2020. Therefore, an individual whose hours and wages are reduced by 40% as part of the short time or shared work program will receive 60% regular wages, 40% of their weekly unemployment benefits, and the $600 weekly payment. Without the additional benefits, the normal short time and shared work benefits usually pay about half of the employee’s lost income due to reduced hours.
Information and updates for the Minnesota shared work program can be accessed here.