By Michael S. Moore and Daniel L. Herrington
Enhanced Unemployment Insurance Provisions
The CARES Act, now passed by the House and Senate and expected to be signed by the President changes the unemployment system and created a pandemic unemployment assistance program. For weeks of unemployment, partial unemployment, orinability to work caused by COVID-19 between January 27 and December 31 the act provides covered individuals with unemployment benefit assistance when they are not entitled to any other unemployment compensation or waiting period credit. This includes self-employed and other workers, such as independent contractors, who have not previously been included in the unemployment system. The weekly benefit amount is generally the amount determined under state law plus an additional $600 for up to 39 weeks (which is notably longer than the typical 26 weeks in most states).
Expanded Coverage and Eligibility
- Individuals are eligible for these benefits if they self-certify that they are able to work and available to work and are unemployed, partially unemployed, orunable to work for one of the following reasons:
- The individual is diagnosed with COVID-19 or experiencing COVID-19 symptoms and seeking medical diagnosis;
- A member of the individual’s household was diagnosed with COVID-19;
- The individual is caring for a member of their family or household who was diagnosed with COVID-19;
- A child or person for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school/facility is required for the individual to work;
- The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of COVID-19 public health emergency;
- The individual is unable to reach the place of employment because a health care provider advised to self-quarantine due to COVID-19 related concerns;
- The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;
- The individual became the breadwinner or major support because the head of household died from COVID-19;
- The individual quit as a direct result of COVID-19;
- The individual’s place of employment is closed as a direct result of COVID-19 public health emergency; or
The individual meets additional criteria established by the Secretary of Labor.
The act also expands unemployment to also cover those who traditionally are not eligible. Excluded are those who have the ability to telework with pay or if they receive paid sick leave or other paid leave benefits.
These provisions are all based upon states entering into agreements with the Federal Agencies. The states are then reimbursed for the costs of the unemployment benefits paid pursuant to these new rules.
Extended Unemployment Provision
The CARES Act also provides for extended benefits for up to 13 weeks after the end of the State maximum (currently 16 weeks in Arkansas).
These extended benefits are only available to people who are unemployed, but are able to work, available to work and are actively seeking work.
Employee Retention Tax Credit
The CARES Act provides private employers and non-profit organizations a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. This tax credit is not available to employers that receive an SBA loan pursuant to the Act.
For employers with more than 100 full-time employees, the credit is based on the wages paid to employees when they are not providing services due to the COVID-19-related closure. For employers with fewer than 100 full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of wages paid to an employee, including health benefits. The credit is effective for wages paid after March 12, 2020, and before January 1, 2021.
Delay of Employer Payroll Taxes
The CARES Act allows employers and self-employed individuals to defer payment of the employers’ share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees.
The deferred amounts would be payable over the next two years – half due December 31, 2021, and half due December 31, 2022. This provision does not apply to employers whose debts have been forgiven under SBA loans made available pursuant to the CARES Act.
Healthcare Workforce Labor Provisions (Sections 3600 to 3611)
The labor provisions mirror the previously stated limits on the paid leave for Emergency Family and Medical Leave Expansion Act. This limit is $200 per day, per employee and a $10,000 aggregate.
Section 3602 limits emergency paid sick leave to $511 per day or $5,110 in the aggregate for reasons 1, 2 and 3 and $200 per day or $2000 in the aggregate for reasons 4, 5 and 6 in Section 5102 of the FFCRA.
Section 3603 mandates that states provide two of the three methods of application for initial benefits: in person, by phone or online.
Section 3604 allows the Director of the Office of Management and Budget to exclude certain classes of government employees from the emergency paid sick leave and expanded FMLA leave.
Section 3605 clarifies the rule regarding rehired employees. Specifically, it provides that the 30 days’ employment need not be contiguous. If an employee was laid off no sooner than March 1, 2020 and had worked for the employer for at least 30 of the last 60 calendar days before their layoff, they would be eligible for the paid sick leave and Emergency Family Medical Leave for childcare.
Section 3606 might be the best news of this provision. It provides, subject to certain guidelines and limits, that anticipated tax credits may be advanced.
Daniel L. Herrington is a partner in the Labor and Employment Relations Practice Group focused on representing employers in all areas of labor and employment law, including ADA, FMLA, Wage and Hour, Title VII, OSHA and NLRA.
Michael S. Moore is a partner in the firm’s Labor and Employment Practice Group with an emphasis on wage-and-hour collective action employment discrimination defense. He specializes in litigation of discrimination cases, wage-hour collective actions, sexual harassment, wrongful discharge, FMLA and employee and supervisor training.
Disclaimer: The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Attorneys.