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CARES Act Provides Federal Relief – How it Affects Unemployment Compensation


The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law on Friday, March 27th, providing $2 trillion in relief to individuals, businesses, and state and local governments.  The law provides enhanced benefits to employees and relief for certain employers under the Unemployment Compensation systems of states, provided that the states enter into agreements with the federal Secretary of Labor with respect to these benefits.  It is likely that Connecticut will accept the federal relief afforded by this legislation.  It does not appear that employers will be responsible for increased liability from these payments.

Expanded Eligibility for Employees

The law provides for expanded eligibility for Unemployment benefits to individuals who either are ineligible for regular Unemployment compensation or extended benefits or have exhausted the benefits available to them.  The law sets forth 11 reasons an employee (or even self-employed individuals) might be eligible for benefits, all of which are related to COVID-19.  Individuals are ineligible for benefits if they can telework for pay or if they are receiving paid leave benefits.  The expanded eligibility applies to weeks of unemployment from January 27, 2020 through December 31, 2020, up to 39 weeks.  The amount of the benefits are the total of the weekly benefit amount authorized under the unemployment compensation law of the state, $600 as Federal Pandemic Unemployment Compensation, and any increase that may later be available.  The statute provides a mechanism for computing the benefit for individuals who would not be available for Unemployment under state law (such as self-employed individuals).  The federal government will provide the benefits themselves plus administrative expenses to the states.

Increase in Benefits

All employees eligible for Unemployment benefits receive an additional $600 per week funded by the federal government.  The federal government will provide the benefits themselves plus administrative expenses to the states.  It does not appear that employers will be responsible for increased liability from these payments.  The increased benefits are available from the date the state enters into an agreement with the federal government for these benefits until July 31, 2020.

Elimination of Waiting Week

If a state pays Unemployment benefits for the first week that the individual is unemployed, without requiring a waiting week, the federal government will reimburse the State for the benefits and administrative expenses for that week.

Relief for Reimbursing Employers

Some non-profit and public employers do not pay contributions into the Unemployment Compensation system, but reimburse the state when claims are paid out, dollar for dollar.  The federal legislation provides for the federal government to pay states one-half of the amount of Unemployment benefits from March 13, 2020 until December 31, 2020.  The funds transferred to the state must be used to reimburse those non-profit and public employers who reimbursed the Unemployment fund for claims made during that period.

Short-Time Compensation (Shared Work Program)

States using a “Short-Time Compensation” program, known in Connecticut as the Shared Work Program, are eligible to receive all compensation paid by the program from the federal government.  It is not clear whether these payments will benefit employers.

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As employers navigate decisions about furloughs, layoffs, and reduction of operations, it is important to know what Unemployment benefits may be available to affected employees.  The labor and employment attorneys at Berchem Moses PC can help public and private employers navigate these complex decisions.