How Has the CARES Act Changed Unemployment?

There is no question that the impact of COVID-19 has been devastating for both employers and employees.  Nearly 10 million employees nationwide filed for unemployment for the first time in the last three weeks.  The impact has been particularly pronounced in our state, as more than 1 million Pennsylvanians have filed for unemployment during that span.

In light of these numbers, it is no wonder that we have received many questions from employers about the benefits that may be available to the individuals that they have had to furlough or lay off.  In particular, employers have wanted to know more about how the Coronavirus Aid, Relief, and Economic Security (“CARES Act”), the $2.2 trillion aid package that became law in late March, has changed the unemployment system.  Although we briefly touched on this topic in a prior post, we wanted to address these issues more in-depth for the benefit of our clients and friends.

Waiting Week Waiver

Under normal circumstances, an individual who applies for unemployment compensation benefits in many states – including Pennsylvania -- would not receive benefits during the first week that he/she was unemployment.  This period is known as the “waiting week.”  In mid-March, Pennsylvania Governor Tom Wolf took executive action to temporarily eliminate the waiting week period so that eligible applicants can accrue benefits as soon as they apply.  Under the CARES Act, the federal government will provide full funding for states that waive this waiting week.

Federal Pandemic Unemployment Compensation

Federal Pandemic Unemployment Compensation (“FPUC”) is the $600/week benefit that the federal government will provide through July 31, 2020 to each individual who is receiving unemployment compensation through his/her state.  The Pennsylvania Department of Labor & Industry (“L&I”), which administers the state’s unemployment program, will be administering FPUC to eligible recipients.  L&I has indicated that, once it receives guidelines from the U.S. Department of Labor (“DOL”) on how to administer FPUC, it will modify its system to implement that guidance.  According to L&I, it is expected that FPUC will be paid on a bi-weekly basis and will be retroactive to claims for the week beginning March 29, 2020.  Individuals will not need to apply separately for FPUC.

In light of FPUC, many employers have expressed concern that their employees will voluntarily quit their positions so as to collect unemployment and FPUC.  DOL has stated, however, that an employee who has quit his/her job without good cause would be ineligible for FPUC (and unemployment) and could be subject to fraud under state unemployment law.

Pandemic Emergency Unemployment Compensation

Pandemic Emergency Unemployment Compensation (“PEUC”) provides up to 13 weeks of additional unemployment benefits to individuals who: (1) have exhausted all rights to unemployment compensation under state law; (2) are not entitled to unemployment compensation under state law; and (3) are able to work, available to work, and actively seeking work.  Under the CARES Act, states are to offer flexibility in meeting the “actively seeking work” requirement if an individual is unable to search for work because of COVD-19, including because of illness, quarantine, or movement restriction.

As PEUC runs through the end of 2020, it allows individuals who have already exhausted their unemployment benefits or will do so in the coming weeks and months to receive additional benefits that they otherwise would not have received.

Pandemic Unemployment Assistance

Finally, the CARES Act extends benefits to individuals who would otherwise be ineligible for unemployment or PEUC, such as individuals who are self-employed, are seeking part-time employment, do not have an adequate work history, or who have exhausted their rights to unemployment and PEUC.  These benefits are known as Pandemic Unemployment Assistance (“PUA”). 

An individual described above may be eligible for PUA so long as he/she is able and available to work, but is unable or unavailable to do so because: (1) he/she has (or had) symptoms of COVID-19; (2) a member of his/her household has COVID-19; (3) he/she is caring for a family or household member who has COVID-19; (4) he/she is the primary caregiver for a child or other household member whose school or child care facility has closed due to COVID-19; (5) he/she cannot go to work because of a COVID-19 related quarantine; (6) he/she cannot go to work because his/her healthcare provider has advised him/her to self-quarantine; (7) he/she was supposed to start a new job, but now does not have a job or is unable to go to work as a result of COVID-19; (8) he/she has become the breadwinner for a household because the former head of the household died from COVD-19; (9) he/she had to quit his/her job as a result of COVID-19; or (10) his/her workplace closed because of COVID-19.

Importantly, individuals who can telework with pay or who are receiving paid sick leave or other paid leave benefits are ineligible for PUA.

What’s Next?

As this situation develops, it may be the case that the federal government enacts subsequent legislation that provides additional unemployment benefits.  It may also be the case that Pennsylvania takes additional legislative action beyond Senate Bill 68, which was passed late last month. 

To stay updated on all key employment law developments related to COVID-19, subscribe to our blog and follow us on social media.  We remain committed to providing employers with timely updates and analysis on the issues that affect their workplaces.  For questions about this or any other labor and employment law matter, please contact the attorneys at Hoffman & Hlavac.

George Hlavac