On December 27, 2020, the President signed the next stimulus bill that Congress passed on December 21, 2020, that includes additional funding for unemployment benefit programs under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) enacted in March 2020. Here are some important takeaways for employers.
Extended Unemployment Benefits
The CARES Act expanded unemployment insurance benefits available to employees, including through the following three programs: Federal Pandemic Unemployment Compensation (FPUC); Pandemic Emergency Unemployment Compensation (PEUC); and Pandemic Unemployment Assistance (PUA). The PEUC and PUA benefit programs were slated to end on (or in many states, shortly before) December 31, 2020, and the $600 weekly supplement benefit payment under FPUC expired at the end of July 2020. The expiration of these benefits meant no replacement income for the unemployed effective January 1, 2021. The following summarizes the initial unemployment benefits offered by the CARES Act and the expansion/extension of unemployment benefits under the recently passed stimulus bill.
Federal Pandemic Unemployment Compensation (FPUC)
Under the CARES Act, FPUC provided an extra $600 weekly benefit for all weeks of unemployment between April 5, 2020, and July 31, 2020, in addition to the benefit amount an employee would otherwise be entitled to receive under state law. The recently passed stimulus bill revives FPUC, but reduced the supplemental weekly benefit by half meaning unemployed individuals are now entitled to a $300 weekly benefit through March 14, 2021.
Pandemic Emergency Unemployment Compensation (PEUC)
The Cares Act established the PEUC program to allow individuals who have exhausted their unemployment compensation benefits to receive up to 13 additional weeks of benefits, provided they “are able to work, available to work, and actively seeking work.” The new stimulus bill extends PEUC by providing up to 24 weeks of additional unemployment benefits to eligible individuals who have exhausted the unemployment benefits available under state law. Before the CARES Act, many states capped their benefits at 26 weeks. Now eligible recipients can receive up to 50 weeks of unemployment benefits between state programs and PEUC. After March 14, 2021, new PEUC claimants will not be eligible for the extra weeks of benefits, but individuals who have been receiving PEUC benefits as of March 14, 2021, will be eligible to continue to receive benefit payments through April 4, 2021.
Pandemic Unemployment Assistance (PUA)
In general, PUA provided up to 39 weeks of unemployment benefits to individuals not eligible for regular unemployment compensation or extended benefits, including those who had exhausted all rights to such benefits. Individuals covered under PUA include the self-employed including independent contractors, those seeking part-time employment, individuals lacking sufficient work history and those who otherwise do not qualify for regular unemployment compensation or extended benefits. The new stimulus extends PUA benefits until March 14, 2021, after which new claimants will no longer be permitted to apply for PUA benefits. However, eligible individuals receiving PUA benefits as of March 14, 2021, will continue to receive benefits until April 5, 2021. Like PEUC, the duration of PUA benefits for eligible individuals is extended from 39 weeks to a total of up to 50 weeks.
New Provisions Under the Bill
In addition to the extension of unemployment benefits under the original CARES Act, the stimulus bill includes new provisions including fraud and mixed earner unemployment compensation provisions.
As of January 31, 2021, additional documentation is required to apply for PUA benefits as follows:
- New applicants will have 21 days to submit documentation substantiating their employment, self-employment or planned commencement of employment/self-employment.
- Individuals already receiving PUA benefits prior to January 31, 2021, must provide documentation within 90 days of January 31.
- States must have procedures in place to validate the identity of claimants and to ensure timely payments. The federal government will cover costs of these procedures.
- States must have a process in place for employers to report to the state agency instances in which a former employee refuses to return to work or refuses to accept an offer of suitable work without good cause, rendering the individual ineligible for unemployment benefits.
Mixed Earner Unemployment Compensation Provision
Individuals who receive at least $5,000 a year in self-employment income will receive an additional $100 weekly benefit, in addition to the benefit amounts they otherwise would be entitled to receive from traditional employment under state law. Previously, these individuals were not eligible for PUA benefits if they received some regular state unemployment benefits for traditional employment, and regular state law benefits did not consider self-employment in calculating the benefit amounts. The new federally-funded “mixed earner” benefit is in addition to the $300 supplemental weekly benefit under FPUC and also expires on March 14, 2021.
Get Smart HR In 2021
Due to the timing of the bill’s passage, the final week of the CARES Act programs, it is likely the new benefits may not be implemented immediately and federal guidance will be issued to assist with the implementation and address questions the states may have. Smart HR will continue to monitor these developments and advises employers to monitor their state websites for up-to-date information. Stay tuned for next week’s blog addressing other assistance provided to employers in the stimulus bill such as the additional $284 billion allocated for the Paycheck Protection Program in 2021.