By Katherine C. Campbell
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides expanded unemployment benefits for those individuals affected by the COVID-19 pandemic. In particular, the CARES Act creates three unemployment programs: (i) Pandemic Unemployment Assistance; (ii) Pandemic Emergency Unemployment Compensation; and (iii) Federal Pandemic Unemployment Compensation. These programs work alongside state unemployment benefits and are fully funded by the federal government.
Pandemic Unemployment Assistance (PUA)
Pandemic Unemployment Assistance is designed for individuals who are not eligible for regular state unemployment benefits because they have exhausted their benefits, they do not have sufficient wages to qualify for unemployment, or they are otherwise unqualified or disqualified from receiving such benefits. For example, PUA covers workers such as independent contractors, gig workers, and self-employed individuals. PUA provides up to 39 weeks of benefits in an amount like what the worker would have received if covered by state benefits. To receive these benefits, workers will need to provide documentation of the wages received from the prior job. If the prior work was as a self-employed individual, benefits will be calculated based upon those earnings.
Benefits under PUA are available from January 27 through December 21, 2020. The Arkansas Division of Workforce Services (DWS) announced that it will begin accepting application for the PUA program beginning the week of April 27, but workers eligible for the program will receive benefits backdated to the date they were laid off.
Individuals are eligible if they self-certify that they are able and available to work but are currently unable to work due to a reason related to COVID-19. These reasons include:
- Individual is diagnosed with COVID-19;
- Individual is experiencing COVID-19 symptoms and seeking medical attention;
- A member of the individual’s household was diagnosed with COVID-19;
- Individual is caring for a diagnosed family or household member;
- Individual has primary caregiving responsibility for a child who is unable to attend school or another facility that is closed as a direct result of COVID-19 public health emergency
- Individual is unable to reach the place of employment because of a quarantine imposed as a direct result of COVID-19 public health emergency
- Individual is unable to reach the place of employment because a health care provider advised the individual to self-quarantine due to COVID-19 related concerns
- 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
- Individual became the breadwinner or major support because the head of the household died from COVID-19
- Individual quits as a direct result of COVID-19.
This will be a difficult determination, and thus employers should attempt to address employees’ concerns before allowing an employee to resign due to fear of infection.
Individual’s place of employment is closed as a direct result of COVID-19 public health emergency
Pandemic Emergency Unemployment Compensation (PEUC)
Pandemic Emergency Unemployment Compensation is intended for individuals who have exhausted their regular state unemployment compensation and provides up to 13 weeks of additional benefits.
Federal Pandemic Unemployment Compensation (FPUC)
Federal Pandemic Unemployment Compensation provides an additional $600 in weekly benefits to individuals drawing any type of unemployment compensation, including regular state benefits, partial unemployment benefits, PUA, or PEUC. The additional $600 amount is paid in addition to weekly unemployment benefits. Arkansas began issuing FPUC amounts the week of April 6, and the program runs through July 31, 2020.
Other CARES Provisions
In addition to these new programs, the CARES Act provides temporary full federal funding for the first week of unemployment compensation and eliminates the normal one-week waiting period to receive unemployment benefits.
The Act also indicates that reimbursing employers will be allowed flexibility by the state so that they are not adversely affected, although guidance on that issue is still forthcoming.
Effect of Part-Time Work
Workers who have experienced reduced pay or reduced hours are eligible to claim unemployment benefits and will receive benefits in a reduced amount. Individuals working while collecting unemployment benefits must report work (including self-employment) and earnings when filing their weekly unemployment claims. A worker may earn up to 140 percent of his weekly benefit amount after which there is a dollar for dollar reduction in the amount of unemployment benefits he receives. Under both the PUA and state unemployment law, an employee will not be eligible for unemployment where the employee teleworks with full pay. The employee may be eligible for partial unemployment benefits where the employee performs telework on a reduced-hour basis however.
Effect of Paid Sick Leave
DWS has instructed that if an employer offers sick leave to address COVID-19, then a person who voluntarily quits in lieu of taking leave is likely not eligible for unemployment benefits. Similarly, if an employer is covered under the Families First Coronavirus Response Act (FFCRA), their employees should use the paid leave provided by that Act before seeking unemployment for that reason. Employees who are not covered by the FFCRA (i.e., those who work for employers with more than 500 employees or fewer than 50 employees in certain situations) may receive unemployment benefits while on sick leave. In addition, employees on Emergency FMLA only receive 2/3 of their regular rate of pay. These employees may be able to make up the remaining 1/3 of wages through unemployment.
Shared Work Program (WSP)
Another important aspect of the CARES Act is its funding of the state’s Shared Work Program through December 31, 2020. This program allows employers to reduce hours by up to 40 percent, and allows employees to receive a portion of their unemployment benefits while working reduced hours. The program is particularly beneficial for employers and employees alike during the COVID-19 pandemic. Employers’ experience ratings are not affected, and they are able to call employees back to work more easily. Employees receive partial wages, partial unemployment benefits, plus the $600 weekly benefits from the CARES Act. Notably, the usual requirement that unemployment benefits are offset by wages earned by partial work, as described above, does not apply. Therefore, employees on a Shared Work Program are guaranteed some amount of state unemployment benefits and the $600 weekly benefit through July 2020.
To participate, the employer must submit an application to DWS with employees’ names and proposed reductions. Employees may participate in the program whether exempt or non-exempt and whether hourly or salaried. Once approved, employees submit individual applications for unemployment benefits and weekly certifications. The employer may participate in the program for up to 26 weeks and may end participating in the program with one week’s notice. Importantly, to be eligible, the employer must not have laid off more than 10 percent of employees in the Work Share Program within the last four months, although a previous reduction in hours does not affect eligibility.
Katherine C. Campbell is an associate in the Litigation Practice Group at Friday, Eldredge & Clark. She serves as litigation counsel for individuals and businesses in complex business and commercial disputes including employment claims, collective action wage and hour claims, and breach of contract matters.
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.
FAQ - Shared Work Program (WSP) & Unemployment
|We complied some of the questions asked over the course of the last few weeks from our clients. Here is a summary of those frequently asked questions:|
Can I apply for the WSP if I have already reduced hours or pay?
Yes, so long as the employees have not been completely laid off yet.
Can I apply for the WSP now but not implement until later?
Yes, but you will want to note the approximate start date on the application.
My employees are higher earning. Will they still be entitled to state unemployment + $600 on the WSP?
Yes, the usual formula that partial work offsets the weekly benefits after it surpasses the 140% mark is waived for purposes of the WSP.
Can exempt employees be on a WSP?
Yes, but if their salary is reduced enough they will become non-exempt and you will want to comply with the FLSA’s requirements for those employees.
If I get a PPP loan, can I still use a WSP?
Yes, but you will want to be mindful of the PPP’s requirements that you must use 75% of PPP loan proceeds on payroll and you must bring back your employees by June 30.
What if I layoff my employees after I start the WSP?
You will not be eligible to participate in a WSP for at least 4 months.
What if my employee would rather take full unemployment than work 60% hours?
They will be considered as refusing to work and will be disqualified from UI.
Are reimbursing employers eligible to participate?
Yes, but it is currently unclear whether and how much the employer will be required to pay to the state.
Is there a minimum # of days required to work in AR to be eligible for AR unemployment?
Not under PUA
Will employees on a shared work program be eligible for the $600 weekly benefit?
Can the shared work program be cancelled at any time?
Yes, with a week’s notice.
-Questions answered by Attorneys Michael S. Moore and Katherine C. Campbell.