New Unemployment Guidance Provides Some Answers to Employers Considering Layoffs

Across the U.S., employers have many questions regarding how employees out of work due to the 2019 novel coronavirus (COVID-19) pandemic can benefit from the expanded unemployment insurance (UI) benefits offered by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Last weekend, the U.S. Department of Labor’s (DOL’s) Employment and Training Administration issued two guidance letters that clarified elements of the CARES Act. The guidance letters, sent to administrators of state workforce agencies, offer insight on how states can implement and operate two of the main programs included as part of the CARES Act:

  1. The Federal Pandemic Unemployment Compensation program (FPUC), which provides an extra $600 per week on top of the weekly benefit amounts an employee would have otherwise received through the UI program through the end of July; and

  2. The Pandemic Unemployment Assistance (PUA) program, which provides UI benefits under certain situations to individuals (including some independent contractors, self-employed individuals and gig workers) who would not otherwise be eligible to receive UI benefits under the prior UI structure.


With respect to the FPUC program, the guidance clarifies a number of points:


For the PUA program, the guidance is largely focused on outlining which individuals are and are not eligible for the program:


When making the decision as to whether or not to layoff or furlough employees so that they can collect UI benefits, a few factors should be considered:

  1. For an employee to be eligible for benefits, under most circumstances, he or she must be involuntarily unable to work. As such, the employer should be the one initiating the layoff or furlough, not the employee.

  2. Some employees may earn close to or exceed their normal weekly wage when factoring in FPUC benefits. For others (for example, anyone earning less than $970 per week in Wisconsin), UI benefits will constitute a reduction in their regular pay. While some employers may be tempted to try and make employees whole by supplementing UI benefits, doing so will either reduce the employee’s weekly benefit or render the employee totally ineligible to receive benefits.

  3. It is ultimately the responsibility of each employee to file for UI benefits and to provide the UI agency in their respective state with the information it needs to process benefits. While some states have offered programs for employers to certify multiple employees’ eligibility in the context of a mass layoff, most states, at least at this point, continue to consider each application on a case-by-case basis. Employers should resist pressure to file for benefits on behalf of their employees or to provide anything other than general advice with respect to UI requirements. Ultimately, employers do not have the capability to choose whether to grant or deny UI benefits to employees and should avoid intimating such.

The DOL intends to publish additional guidance concerning the expanded UI benefits program.

Copyright © 2023 Godfrey & Kahn S.C.
National Law Review, Volumess X, Number 99