In response to the coronavirus outbreak, the U.S. Department of Labor recently announced new guidance outlining ways states can be more flexible in administering and expanding unemployment insurance (UI) programs in order to assist employees affected by COVID-19.
Generally speaking, UI is a joint state–federal program that provides cash benefits to eligible workers. Although each state has discretion to establish its own eligibility guidelines, an employee typically is eligible for UI benefits if they:
- Are unemployed through no fault of their own;
- Meet certain work and wage requirements; and
- Meet any other additional state requirements.
The federal government’s new guidance allows states to be more flexible in paying UI benefits related to COVID-19 where:
- 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.
As a result of the rapidly changing environment, nearly all 50 states have issued guidance specifying how they have expanded their UI programs to cover employees affected by COVID-19. However, not all states have expanded UI benefits to the same extent, and there are variations in each state with respect to things like furloughs, charge-back rates to employers, and how UI benefits interact with paid leave, among other things.
Are COVID-19-related UI benefits charged back to the employer?
It depends on the state. A handful of jurisdictions, such as Iowa, Maine, and the District of Columbia, have taken the position that benefits paid for reasons related to COVID-19 will not be charged to an employer’s experience rating, such that their UI contributions should not increase. However, other states like Delaware have made clear that they will not exclude COVID-19 claims from employer experience ratings, meaning employers could see an increase in their unemployment tax rate. Many other states have not provided any guidance on this issue.
If an employee’s hours are reduced, is the employee eligible for UI benefits?
The majority of states appear to have taken the position that an employee whose work hours are reduced due to COVID-19 may be eligible for at least partial UI benefits, but it is important to check with counsel if you have a question in this regard.
Are employees required to comply with the one-week waiting period?
Most, if not all, states typically require employees to wait a period of one week before they can apply for UI benefits. At this point, the majority of states have waived the one-week waiting period if they are applying for benefits due to COVID-19.
Are employees required to search for work while unemployed due to COVID-19?
Generally speaking, an employee must actively be searching for work in order to be eligible for unemployment benefits. However, in light of the coronavirus pandemic, many companies have had to temporarily terminate employees because of business closures or lack of production, but anticipate rehiring employees when the COVID-19 emergency is over. As a result, a number of states, such as Delaware, the District of Columbia, Ohio, and Pennsylvania (among others), have waived the work search requirement when an employee applies for benefits for COVID-19-related reasons.
Other states have not waived the work search requirement completely, but have relaxed it. For instance, in Maryland, UI claimants may meet the work search requirement by performing other reemployment-related activities such as creating a resume or completing online classes. And, Maryland waives the work search requirement if an employer has temporarily laid off a claimant and provided a return-to-work date that is less than 10 weeks in the future. Similarly, Minnesota has also relaxed the work search requirement such that claimants may comply with the requirement by looking for suitable work that does not pose a risk to the claimant’s health or the health of others, or by staying in contact with their employer if the claimant is only temporarily laid off.
Are furloughed employees eligible for UI benefits?
In many states, UI benefits have not been restricted to those employees who have been terminated. Rather, numerous states allow employees who have been furloughed, or placed out of work entirely or given a modified or reduced schedule, to collect UI benefits as well. For instance, California provides partial wage replacement benefits to workers whose hours are reduced through no fault of their own, and eligible individuals can receive benefits that range from $40 to $450 per week. Arizona, Georgia, Hawaii, Louisiana, and Maine have followed suit. States are likely to expand the scope of workers that qualify for UI benefits, such as part time, temporary and seasonal employees.
If you have questions regarding the applicability of a certain state’s UI benefits to your workforce, please contact your Reed Smith attorney or the authors of this blog for assistance.