July 13, 2020

Volume X, Number 195

July 13, 2020

Subscribe to Latest Legal News and Analysis

July 10, 2020

Subscribe to Latest Legal News and Analysis

Department of Labor Clarifies Entitlement to Additional $600 in Partial Unemployment Context

The U.S. Department of Labor (“DOL”) issued supplemental CARES Act guidance  on May 8, 2020, that addresses the interplay between the Federal Pandemic Unemployment Compensation (FPUC) program and partial unemployment benefits at the state level.  The FPUC program is the portion of the CARES Act that enhances state unemployment insurance benefits by $600 each week a claimant is eligible for state benefits.  That program is in effect only between the week ending April 4, 2020 and the week ending July 31, 2020.

Under most state unemployment laws, individuals whose hours have been reduced to less than full-time (according to the state’s definition of full-time) can be eligible for “partial” unemployment benefits.  If, however, the value of their part-time earnings in any week exceeds the state’s maximum weekly benefit (or an amount based on a formula that takes into account the maximum weekly benefit), individuals normally will be disqualified from receiving state UI benefits for such weeks. Questions persist as to whether that state-level earnings disqualification also extends to FPUC benefits, or whether a reduction in hours in and of itself would create entitlement to the FPUC $600 payment. The May 8 guidance reiterates that individuals must be eligible to receive at least one dollar ($1) of state benefits for the claimed week in order to also collect the FPUC payment for that week.

On the other hand, if an individual’s state UI benefits are reduced because of a benefit offset – a reduction in benefits attributable to a previous UI overpayment – the FPUC supplement will still be available, even if the offset reduces the state UI payment to zero.  Conceptually, these benefit repayments are still “payments” under the state UI system, even though they are diverted from the claimant to the state for repayment purposes due to a prior overpayment.

The May 8 guidance explains that up to fifty percent (50%) of any FPUC payment can be used to offset intrastate state overpayments, or federal unemployment compensation overpayments, provided the state has in place the applicable intrastate and federal offset agreements.  A state can offset the underlying state benefit payment in the amount permitted under its own law, and then offset the FPUC benefit separately.

The potential for moral hazard associated with the FPUC program has created concern among some employers that furloughed employees might refuse to return to work if they can make more money being unemployed through July 31, 2020, than they earned through full time employment.  Each unemployment program established under the CARES Act makes clear that refusal to accept full-time work for this particular reason constitutes fraud, and is subject to prosecution under federal law.  The supplemental FPUC guidance instructs the states to pursue FPUC fraud cases “in the same manner as all other federal UC fraud cases.”

A 2005 Memorandum of Understanding between the Office of Inspector General for State Workforce Agencies and the DOL’s Office of Workforce Security establishes a $5,000 threshold for referring unemployment fraud cases to DOL’s Office of Inspector General (“OIG”). State agencies therefore bear responsibility for prosecuting FPUC fraud cases of less than $5,000 under their own laws and procedures.  This adds yet another burden to state unemployment agencies that are already experiencing incredibly high claim levels.


Copyright © 2020, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume X, Number 136


About this Author

Andrea Calem Employment Lawyer Hunton Andrews Kurth Law Firm
Senior Attorney

Andrea’s practice focuses on advising employers in all aspects of the employer-employee relationship, and representing their interests in litigation in state and federal courts across the country, and before federal, state and local administrative agencies.

Andrea has many years of experience representing employers in labor and employment matters.  She regularly provides pragmatic, business-oriented advice and counsel on labor and employment concerns, helps employers comply with the plethora of federal, state and local labor and employment laws, provides training on those laws, and...

202 778 2219
C. Randolph Sullivan Labor & Employment Hunton Andrews Kurth Richmond, VA
Senior Attorney

Randy represents management in all aspects of employer-employee relations.

Randy’s practice focuses on employment litigation in federal and state courts and administrative practice before the Equal Employment Opportunity Commission and the National Labor Relations Board, representation of management in labor issues, and advice to management, human resources professionals, and in-house counsel on all aspects of employer-employee relations.

Randy is an Instructor for ProWorkplace, a division of the firm, providing practical, interactive workplace training to management, supervisory, and non-supervisory employees. In addition, Randy is an Affiliate Assistant Professor, Department of Health Administration, Virginia Commonwealth University/Medical College of Virginia. Randy instructs graduate students in the health administration program regarding employment law issues and employment practices. Randy served as a Judicial Clerk to the Honorable Richard L. Williams, US District Court, Eastern District of Virginia from 1993-1994.

Relevant Experience

  • Substantial litigation practice in areas including equal employment opportunity and employment discrimination, sexual harassment, defamation, wrongful discharge and other workplace torts, employment contract, non-compete and trade secret litigation, the Family and Medical Leave Act, and ERISA litigation.
  • Significant experience advising and representing clients in traditional labor matters, including union organizing campaigns and representation elections, defense of unfair labor practice charges, arbitration proceedings, advice on labor-management relations and union avoidance, and collective bargaining negotiations.
  • Advised companies on the WARN Act, Older Worker Benefit Protection Act, and other labor, employment and employee benefit issues in the context of reductions in force and sales/acquisitions of businesses.
  • Advised companies with respect to employment agreements, non-competition provisions/agreements, personnel policies, executive terminations, and severance packages.
  • Advised companies regarding handling and investigating complaints of sexual (and other forms of) harassment and defended against such claims in federal court.
  • Significant experience training managers and supervisors in risk management and effective employee relations related to sexual harassment, discrimination, hiring, discipline, performance management, managing a unionized workforce, and maintaining union-free status.