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March 30, 2020

CARES Act Unemployment Compensation

The CARES (Coronavirus Aid, Relief, and Economic Security) Act, signed into law by President Trump on March 27, provides for extraordinary levels of public spending in an effort to assist individuals and employers during the COVID-19 health crisis. Among the act’s key provisions is a substantial expansion of the unemployment compensation benefits available to those impacted by the crisis. 

Emergency “Federal Pandemic Unemployment Compensation”

The CARES Act provides a federal payment of $600 per week to those already eligible for unemployment compensation benefits, through July 31, 2020. This $600 is in addition to whatever amount the individual is entitled to under state law. Federal pandemic unemployment compensation will be administered by participating states, and the federal government will reimburse states for these payments and the administrative costs of providing them to eligible individuals. 

Federal Funding of the First Week of Unemployment Benefits

Many states require a one-week waiting period before eligibility for unemployment benefits begins. Under the CARES Act, the federal government will fund the first week of unemployment benefits, eliminating the waiting period. This federal funding will continue through December 31, 2020.

Pandemic Emergency Unemployment Compensation—Extended Duration of State Benefits

The CARES Act also extends the available duration of unemployment compensation benefits by providing for an additional 13 weeks of federal benefits beyond the time normally available under state law (normally 26 weeks). This expansion is referred to as “pandemic emergency unemployment compensation.” To be eligible, individuals must be actively seeking employment. 

Pandemic Unemployment Assistance Available to Workers Not Otherwise Eligible

The CARES Act also creates a pandemic unemployment assistance program, which provides unemployment compensation benefits to workers impacted by COVID-19 who would not otherwise be eligible for such benefits. These include “gig economy” workers, independent contractors, the self-employed, and those with a limited work history. The program provides for a maximum of 39 weeks of benefits and is available retroactively beginning on January 27, 2020, and ending on December 31, 2020. Eligible workers will receive the weekly benefit amount authorized under state unemployment compensation law plus the additional $600 in federal payments discussed above. 

Temporary Financing of Short-Time Compensation Payments

Some states provide for short-time compensation programs (commonly known as “work share” programs), which allow employers to avoid layoffs by reducing employee hours, and give affected employees the ability to collect unemployment compensation benefits on a pro-rated basis. The CARES Act provides full compensation to states for the amount of short-time compensation paid through December 31, 2020. The act also incents states that do not have such programs to create them by offering 50 percent reimbursement of benefits paid up to December 31, 2020. 
      
If you have any questions regarding the content of this alert, please contact Dan Elliott, partner, delliott@barclaydamon.com; Dan Blake, partner, dblake@barclaydamon.com; or any member of the firm’s COVID-19 Response Team, COVID-19ResponseTeam@barclaydamon.com.
 

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