UI & The CARES Act


The CARES Act is now Law. The challenge of implementing the Unemployment related provisions to make payments is now beginning for the federal and state governments as the expectation is it is implemented quickly.

The additional COVID-19 related payments are being implemented with federal funds but through state UI administrative agencies, thus the first step is a USDOL/State agreement to enable federal funds to flow. States will be immediately tasked with making any administrative changes to program, systems, law and policy to respond to federal requirements.

The new federal payment provisions in the attached summary include as follows:

Pandemic Unemployment Assistance

PUA is being paid to individuals who are not otherwise eligible to for regular unemployment compensation. It pays the amount based on Disaster Unemployment Assistance regulations in weekly benefit amounts determined by the state and adds $600 per week. It is available if one’s unemployment was caused by COVID-19 for the weeks beginning on and after January, 27, 2020 and ending on or before December 31, 2020. Once the state and USDOL agree claims processes will begin including reach back provisions. These reach back provisions assumes these individuals became unemployed as a result of COVID-19 but did not qualify for regular UC. It starts at the end of January assuming that is the time that reductions in workforce became prevalent due to COVID-19. Because information about the prior compensation of these individuals will not be as readily available as the wages upon which regular UC is based, the administration of this will be difficult to implement, especially with the reach back provision. Also, there is an implicit assumption these individuals could not qualify for regular UC, but they might have been able to qualify during the reach back period but did not apply or they might qualify now – with base period wages that change every quarter.

Federal Pandemic Unemployment Compensation

FPUC is paid to individuals who qualify for regular unemployment compensation. It pays an additional $600 to amounts that would otherwise be paid by an individual state. It is available to individuals whose unemployment is due to the impact of COVID-19, which is very broadly defined. It becomes available beginning the week after USDOL and the state sign the agreement and ending on or before July 31, 2020

It Reimburse the state for amounts paid for the waiting week, conditional on the state waiving the usual waiting week and does not reduce the number of weeks or average weekly benefit amounts for regular unemployment compensation. The immediate issue will be the speed with which agreements may be signed to meet all the conditions and when the individual state systems will be programmed to add the $600. Assuming states move immediately to sign agreements, the earliest this could become effective would be the week ending April 4th.  Many states may not be able to bring this up by the end of the week thus there will most likely be issues with retroactive claims. Additionally since March 31 is the end of a quarter, there may be a concern that the WBAs for the week after the end of the quarter might be higher or lower at the time of application. Proponents of restricting states from reducing the total number of weeks or average weekly benefit amounts for regular UC were successful in adding restrictions during the period of this additional payment. They were also successful in requiring the states pay the waiting week. For states that do not normally pay the waiting week there will be an adjustment required but there is a provision for the state UI trust fund to be reimbursed for the waiting week payment through the federal general fund. Careful accounting will be needed.

Pandemic Emergency Unemployment Compensation

PEUC will be paid to individuals who have exhausted all rights to state and federal unemployment compensation for benefit years on and after July 1, 2019. The amount to be paid is the amount of regular compensation plus $600 per week (consistent with amount of Pandemic Unemployment Compensation). The maximum amount to be paid is 13 weeks during the period. This is similar to how regular Extended UI Benefits adds weeks to regular UC and continues with the additional $600. There is a reach back to exhaustions going back to July of 2019, but states should have the benefit data to notify claimants. Some of them may have returned to work, some may still be unemployed, and some may have filed for Pandemic Unemployment Assistance because they no longer are qualified for regular unemployment compensation or other compensation. Careful coordination will be needed to avoid individuals receiving multiple payments from different sources for the same week.

The United States Department of Labor plans to issue guidance in the immediate future and UTCA will keep you updated in a timely fashion.