Alert From Fox Rothschild LLP : What New York Employers Need to Know About Unemployment Insurance Under the CARES Act
Many New York employers have recently been faced with the difficult decision of whether to terminate/furlough employees immediately or hold out in the hopes that life will soon return to normal. As weeks go by, employee terminations and furloughs increasingly appear to be one of the few available options to many employers. Thus, a common question has emerged during these times: “If I terminate or furlough my employees, how can I make sure they still receive an income until we can re- open for business and bring our employees back?”
Traditional unemployment benefits in New York often fail to replace employee take-home pay. In response to the COVID-19 pandemic, the federal government recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which includes expanded unemployment benefits for employees who are unable to work through no fault of their own. Below is a brief overview of the supplemental unemployment benefits under the CARES Act, as well as answers to some frequently asked questions about how the CARES Act affects unemployment benefits for New York employees.
Supplemental unemployment benefits under the CARES Act
Pandemic Unemployment Assistance (PUA): Extended eligibility for individuals who have traditionally been ineligible for Unemployment Insurance (UI) benefits (e.g., independent contractors, self- employed workers, and individuals who lack sufficient work history) from Jan. 27, 2020 through Dec. 30, 2020;
Pandemic Unemployment Compensation (PUC): Additional $600 per week, on top of existing state UI benefits, to all UI recipients until July 31, 2020; and
- Pandemic Emergency Unemployment Compensation (PEUC): Additional 13 weeks of unemployment benefits beyond the typical 26 weeks already provided by the state, for a total of 39 weeks of federal and state unemployment benefits.
What are the traditional requirements for an employee to receive unemployment benefits?
What are the traditional requirements for an employee to receive unemployment benefits?
Be monetarily eligible for benefits;
- Employees must have worked and been paid wages in jobs covered by UI in at least two (2) calendar quarters, been paid at least $2,600 in one calendar quarter, and the total wages paid to the employee must be at least 1.5 times the amount paid to the employee in the highest earning quarter.
Have lost their job (or have had a significant reduction in hours) through no fault of their own;
Employees who quit or resign are typically ineligible for unemployment benefits.
Employees who work fewer than four (4) days per week and make less than $504 per week may still be eligible for partial benefits.
Be capable, available and looking for work; and
- Certify for benefits weekly.
- Employees must file a claim for unemployment benefits each week in a process referred to as “certifying for benefits” by answering a series of questions to verify continuing eligibility. Employees must answer all questions truthfully when certifying for benefits.
Some of the traditional requirements have changed, while others have not. In response to the COVID-19 pandemic, New York has implemented the following change for employees applying for unemployment benefits:
The traditional one-week waiting period has been waived for New York employees who are out of work due to COVID-19 closures or quarantines, meaning employees who are found eligible for benefits will be credited from the first week of their claim (rather than the second week). This does not mean, however, that employees will be paid as soon as they file their claim.
However, most aspects of New York’s regular unemployment insurance program remain the same, including:
Individuals must be ready, willing and able to work, and must be actively seeking work during each week in which they are claiming benefits in order to be eligible for unemployment benefits. While the CARES Act requires this rule to be “flexible” for individuals unable to search for work due to the COVID-19 pandemic, New York has not yet relaxed this requirement.
- State benefits still last for only 26 weeks (but employees may be eligible for extended benefits under the Pandemic Emergency Unemployment Compensation (PEUC) program, discussed below).
- The state’s maximum benefit amount remains $504 for regular unemployment benefits.
If I want my employees to be eligible for unemployment, does it matter whether they are terminated or placed on furlough?
No. It does not matter how you separate from employees — termination, layoff or furlough. As long as employees are unable to work through no fault of their own, employers may terminate, lay off or furlough employees and these employees will be eligible for unemployment benefits.
What is Pandemic Unemployment Assistance (PUA) and are my employees eligible?
From Jan. 27, 2020 through Dec. 30, 2020, individuals may be eligible for up to 39 weeks of PUA if they do not qualify for regular unemployment benefits (including self- employed workers, independent contractors and those with a limited work history) and cannot work because they:
Are diagnosed with COVID-19 or have COVID-19 symptoms and are seeking diagnosis;
Have a member of their household who is diagnosed with COVID-19;
Are providing care for a family or household member diagnosed with COVID- 19;
Are the primary caregiver for a child whose school or care facility closed due to COVID- 19;
Are unable to reach their place of employment due to an imposed quarantine, or because they were advised by medical provider to self-quarantine, due to COVID-19;
Were scheduled to start new employment and cannot reach the workplace as a direct result of COVID-19;
Became the major breadwinner because the head of household died from COVID- 19;
Quit their job as a direct result of COVID- 19;
Had their place of employment closed as a direct result of COVID-19; or
Meet any additional criteria specified by the U.S. Secretary of Labor.
Note: Individuals are not eligible for PUA if they can telework or are receiving paid sick leave or other paid leave benefits (regardless of whether they also meet any of the criteria listed above).
What do I tell my employees if they ask for assistance with filing for PUA?
Most employees are unlikely to qualify for PUA, which is designed for those individuals who are traditionally not eligible for regular unemployment benefits. However, you should direct your employees to submit an application for regular unemployment benefits and a PUA application by visiting the New York Department of Labor website. Employees will only be eligible for PUA if they are found ineligible for traditional unemployment. Additionally, any time an employee is separated from employment or placed on furlough, be sure to give the employee an unemployment benefits notice, as discussed in our prior alert.
My employees are asking how they can collect the extra $600 in unemployment benefits they have read about in the news. What do I tell them?
You can tell your employees that the additional $600 per week, known as Pandemic Unemployment Compensation (PUC), will automatically be added to regular unemployment benefits and PUA benefits if applicable.
Will PUC benefits reduce regular unemployment or PUA benefits?
No, PUC benefits supplement regular unemployment and PUA benefits through the end of the PUC period, July 31, 2020.
What happens if my employees exhaust their regular unemployment benefits but I am still unable to rehire them or return them to work from a furlough?
If an individual exhausts their 26 weeks of regular unemployment benefits after July 1, 2020, they will receive 13 additional weeks of benefits under the federally funded Pandemic Emergency Unemployment Compensation (PEUC) program. Because this program is federally funded, New York may not charge employers for PEUC benefits paid to individuals.
Will my business be charged for COVID-19 related unemployment benefits paid to employees?
Under the Families First Coronavirus Response Act, states are eligible to receive aid for their unemployment compensation program, provided they abide by certain requirements. One of those requirements is that employers cannot be charged for COVID-19 claims, which would increase their unemployment insurance tax rate. Accordingly, New York should not be charging employers for benefits that are paid to individuals related to loss of work due to COVID-19, such as PUA, PUC, or PEUC benefits.
In these uncertain times, everyone is looking for stability and certainty. While employers may not be able to provide this for their employees, they can still generate goodwill and loyalty by being understanding and offering employees the best information they have to assist with their unemployment questions. Though the above information can serve as a good start for employers fielding employee concerns and questions, experienced counsel will be able to answer additional questions if they arise and employers should contact counsel about additional issues or clarification about these questions.
For more information about this alert, please contact Carolyn D. Richmond at firstname.lastname@example.org or 212.878.7983, Glenn S. Grindlinger at email@example.com or 212.905.2305, Matthew C. Berger at firstname.lastname@example.org or 646.601.7658, or any member of the firm’s New York Labor & Employment Group.