March 26, 2020

Unemployment and COVID 19

How Employers and Employees Are Affected by New Rules for Unemployment During the Coronavirus

Following an announcement from the  U.S. Department of Labor  last week: States which administer unemployment programs, have been granted greater flexibility in determining  who qualifies  for unemployment insurance benefits.

In many states, workers can now file a claim for partial wage replacement if their employer reduces their hours or shuts down due to the pandemic. They are also eliminating the waiting period so employees laid off can receive their money sooner. This can provide some financial relief to service industry workers impacted by  nationwide closures  of restaurants, bars and retail stores.

As more workers lose their jobs and new requirements are announced, state resources are struggling to meet growing demand for assistance. Many state labor department offices have been overwhelmed with activity in recent days, resulting in  site crashes  and  long waiting times  to contact someone by phone.

Eligibility requirements for unemployment benefits will continue to fluctuate over the coming weeks as new legislation and regulations are passed and adopted. A worker who has filed a claim that is not eligible at this time, might be eligible for benefits in the future as the state and federal government approve additional legislation that will expand coverage and benefits. As the rules change and expand, employers and employees should contact their state’s unemployment insurance program for up to date information.

How Unemployment Changes and New Legislation Will Affect Employers?

Although the President of the United States has declared the Coronavirus a national disaster, at this time there has been no Disaster Unemployment Assistance Declaration legislation put in place. Each state has implemented their own guidelines on whether unemployment claims related to the Coronavirus will affect their unemployment tax rates and costs. In some states, if an employee receives unemployment benefits as a result of a Coronavirus related shutdown — there are currently no provisions to waive charge requirements. This could increase the employer’s unemployment tax rates, depending on the volume of claims per employer. The federal government and individual states are looking into assistance, but most states have not made any announcements on giving employers relief of these charges. It’s important to contact your unemployment state agency for specific updates on how they are handling claims and related benefit charges.

What Should Employers Know?

If your company is planning a mass layoff, it would assist your state unemployment agency if you could provide employee specific information.  This will help your state UI agency in processing unemployment insurance (UI) claims more quickly for your impacted staff.

Employers experiencing a slowdown in their businesses or services as a result of the Coronavirus impact on the economy may apply for the UI Work Sharing Program or other UI state programs.  This program allows employers to seek an alternative to layoffs — retaining their trained employees by reducing their hours and wages that can be partially offset with UI benefits.
Employers planning a closure or major layoffs as a result of the Coronavirus can get help through the Rapid Response program. Rapid Response teams will meet with you to discuss your needs, help avert potential layoffs, and provide immediate on-site services to assist workers facing job losses. Check with your state UI agency for related programs they can provide.

If an employer must temporarily close part or all its business operations due to the COVID-19 virus and lay off employees, the employees will “NOT” have to look for other work while they are collecting unemployment benefits. As long as you plan to return them to their jobs when you resume operations, and provided they remain able and available to work for you and provide you with current contact information by which to reach them, they will not have to seek other work. Some states are requiring a return to work date as well.

Currently there are no expected changes to the 2020 unemployment tax rates across each state. However, the 2021 tax rates may increase due to the claims filed during this time. This and other benefit assistance could also be affected by the federal government announcing Disaster Unemployment Assistance in the weeks to come.