Newly-Enacted CARES Act Provides for Expanded Unemployment Compensation Benefits

The much-anticipated Coronavirus Aid, Relief, and Economic Security Act, otherwise referred to as the “CARES Act”, was officially signed into law on Friday, March 27, 2020 and goes into effect on April 1, 2020.  While the CARES Act provides for various forms of relief, this blog focuses on the expansion of unemployment compensation benefits set forth in the new legislation.

Under Section 2104 of the CARES Act, individuals are provided with enhanced unemployment compensation benefits including 26 weeks of unemployment compensation insurance benefits and, beginning April 5, 2020, an additional $600 per week until July 31, 2020.  The $600 in benefits is in addition to the current unemployment insurance provided by the individual states.  Under Section 2105 of the legislation, if a state waives the standard waiting period requirement and pays recipients as soon as they become unemployed, the federal government will fund the cost of that first week benefit.

In addition, the CARES Act, Section 2107, expands unemployment compensation benefits to provide an additional 13 weeks of benefits if the individual remains unemployed after 26 weeks at a weekly rate of $600 for that 13-week period.  If an individual is currently receiving unemployment from the state, his/her benefits under this new legislation will be updated automatically.

The CARES Act also provides assistance to those individuals typically ineligible for unemployment compensation benefits.  Section 2102 of the CARES Act, known as the Pandemic Unemployment Assistance Program, specifically provides unemployment benefits to individuals who: (1) are not otherwise eligible for, or have exhausted all rights to, unemployment benefits; and (2) are unemployed, partially unemployed, or unable to work because of COVID-19-related circumstances.  These circumstances include individuals: (i) who have been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and are seeking a medical diagnosis; (ii) who have a member of his/her household who have been diagnosed with COVID-19; (iii) who are providing care for a family member or household member who has been diagnosed with COVID-19; (iv) who are the primary caregiver for a child or other person in the household who is unable to attend school or another facility that has been closed as a direct result of COVID-19 and such school or facility care is required for the individual to work; or (x) whose place of employment is closed as a direct result of COVID-19.

Benefits available under Section 2102 are available for the duration of the covered event, beginning retroactively on January 27, 2020 and ending on December 31, 2020, up to a maximum of 39 weeks.  Individuals who are able to work remotely with pay or are currently receiving paid sick leave or other paid leave benefits are ineligible from benefits under Section 2102.

Finally, the CARES Act also incentives states to continue to offer or implement a Short-Time Compensation (“STC”) program for employers that reduce their employees’ hours, rather than terminate the employment, by providing funding to those states.  Under Sections 2108 and 2109 of the CARES Act, employees receiving STC benefits will receive a pro-rated unemployment benefit, with the federal government funding 100% of the costs for states that currently have a STC program and 50% for the states that implement one now.  The funding will be provided in each case through December 31, 2020.

Given the infancy of this legislation, the interpretation and implementation of the CARES Act provisions are likely subject to change by administrative regulation and/or guidance.  Look for future blogs from Cole Schotz to help you navigate this constantly-evolving situation.