On April 2, 2020, the U.S. Department of Labor (DOL) issued new guidance on unemployment insurance (UI) for states responding to COVID-19, under the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act.

UI Benefits, Coordination Explained

The guidance explains an employee’s entitlement to leave under the various expanded unemployment leave programs created by the CARES Act, which builds on the existing state-based UI system.  These include extended eligibility for benefits (up to 39 weeks), 100% federal reimbursement to states that waive “first week” eligibility requirements, and an additional $600 added to an employee’s benefit under the Federal Pandemic Unemployment Compensation (FPUC) program for weeks of unemployment through July 31, 2020.  The law also extended benefits to certain workers traditionally ineligible for UI, such as independent contractors, self-employed individuals, and those with limited work history.

The guidance also sets out how various programs are intended to coordinate, explaining that generally an employee who is eligible for traditional UI benefits must first apply for and receive those benefits (as determined by state law, and with the additional $600 federal reimbursement). If or when those benefits are exhausted, the individual may be eligible for an additional 13 weeks of benefits under the CARES Act. If those benefits are exhausted, there may be additional benefits available depending upon the state’s unemployment rate and if state law provides a trigger for periods of high unemployment.  The guidance also explains eligibility for individuals who are not eligible for traditional UI benefits under the new provisions of the CARES Act.

Finally, the guidance notes that the DOL will establish model legislative language for states seeking to establish short-time compensation (STC) programs.  STC programs (also known as “shared work” or “work share” programs) are designed to avert layoffs where an employer reduces hours of work and workers receive a partial unemployment benefit that is generally greater than would be received under regular unemployment for partial work.  The CARES Act includes robust federal funding for states establishing such programs, and enhanced federal funding for states that already provide them.

“Good Cause” Still Required, But Practical Concerns Remain

Notably, the guidance reiterates that an employee’s quitting work without good cause should mean that they are not entitled to benefits, and stresses that quitting work without good cause to obtain additional benefits would be punishable fraud under UI laws. 

As a practical matter, however, concerns remain, given the broad expansion of the law Congress enacted and how states will enforce the requirement that an employee must have “good cause” to quit and still be eligible for UI.  Under the CARES Act, an individual may be eligible for expanded UI benefits if they self-certify that they are able and available for work, but are unable to work for a number of COVID-19-related reasons, including being diagnosed with COVID-19, caring for a family member so diagnosed, or being the primary caregiver for a child whose school is closed as a result of COVID-19, and whose care is required to allow the individual to work. 

Again, while the DOL’s guidance makes clear that an employee who quits without good cause simply to avail themselves of UI benefits may be considered to be engaging in fraud, state unemployment offices may struggle to enforce good cause due to the simple inability to contest some of the reasons for benefits, which are subjective in nature or may not be readily verifiable by objective means. Further, given each state may have slightly different interpretations of good cause, this creates the potential for the same general fact pattern to be sufficient for benefits in some states but not others.  Nonetheless, the expectation in the short run will be that states will broadly interpret eligibility to provide an expansive opportunity for individuals to receive benefits, in keeping with the spirit of the CARES Act.

Going Forward

With unemployment claims reaching a record-breaking 6.6 million this week, and the scope of the impact of COVID-19 on our nation’s economy and workforce still unfolding, there is already talk in Washington, DC about what the next phase of the government’s COVID-19 response may look like.  Efforts to further expand UI benefits may be considered as part of this package, depending on how and to what extent steps already taken prove successful in stabilizing the economy. 

Littler WPI will continue to monitor closely and report on relevant developments.