Late Friday night, the President signed the CARES Act (the Coronavirus Aid, Relief, and Economic Security Act). This issue of Compliance Matters summarizes some of the key provisions of the bill that employers should keep in mind in evaluating their options in navigating through these challenging times. The bill leaves many questions unanswered and we anticipate further interpretive guidance will follow, as the issues continue to evolve.
Expanded Unemployment Benefits
The only compensation offered to laid off employees by the bill are expansions on unemployment benefits. The bill expands who may be eligible to receive unemployment benefits, when an individual can start receiving benefits, and the amount of benefits that an individual can receive, as follows.
Who can receive it:
The bill extends unemployment benefits to those who would not traditionally have been eligible for unemployment benefits who are unable to work as a result of COVID. Specifically, unemployment benefits are now available to individuals who are self-employed, independent contractors, and those with a limited work history. The definition of who is unable to work as a result of COVID is very broad, and includes individuals who:
- have been diagnosed with COVID-19, or are experiencing symptoms;
- a member of the individual’s household has been diagnosed with it;
- the individual is providing care to a family member or person in household diagnosed with it;
- a child for which the individual has primary caregiving responsibility for is unable to attend school because it is closed as a result of COVID;
- the individual cannot reach their place of employment because of a quarantine, or because they need to self-quarantine;
- the individual’s place of employment is closed as a direct result of the COVID–19 public health emergency.
Individuals cannot receive unemployment benefits if they have the ability to telework with pay. Individuals also cannot receive unemployment benefits if they are “receiving” paid sick leave or other paid leave benefits. The bill does not expand further on the exclusion for those receiving paid sick leave, but a plain read of the text suggests that an employee cannot seek unemployment benefits at the same time that they are currently receiving any type of paid sick leave, including the new federal emergency paid sick leave.
How much can an individual receive:
The bill provides $600 per week of benefits on top of whatever the individual would be entitled to receive through state unemployment benefits. This extra $600/week only applies through July 31, 2020.
How long can an individual receive unemployment benefits under the new law:
The bill states that the federal government will provide temporary full funding of the first week of regular unemployment for states that choose to waive their one week waiting period. However, as a practical matter, whether state agencies will be able to timely process the influx of claims coming in and get individuals paid right away, is an open question. Nonetheless, California has already announced that it will waive the one week waiting period.
In addition, unemployment benefits are extended for an additional 13 weeks after state unemployment benefits end, through December 31, 2020, with a maximum of 39 weeks.
How does it work for individuals who are self-employed?
The calculation of the weekly amount of unemployment benefits self-employed individuals can receive is based upon the net income reported on their tax return deriving from their services, plus the additional $600. As far as how the provision of benefits will be administered, for now the bill provides that it will be done through existing state agencies.
Short Term Compensation Programs
The bill provides funding to states to establish short term compensation programs for the states that wish to do so. These programs would apply where employers reduce employee hours instead of laying off workers, and the employees with reduced hours would receive a pro-rated unemployment benefit.
Limitations on Emergency Paid Sick Leave and Emergency Family Medical Leav
Last week, President Trump signed the Families First Coronavirus Response Act, which provides for Emergency Family Medical Leave and Emergency Paid Sick Leave. The new CARES Act clarifies the key provisions with regard to an employer’s payment obligations under both. Specifically, for Emergency Family Medical Leave (job protected paid time off for parents who must take time off to care for their child because of a COVID-19-related closure of a school or child care facility), the CARES Act clarifies that an employer shall not be required to pay more than $200 per day and $10,000 in the aggregate for
. Likewise for Emergency Paid Sick Leave, the CARES Act clarifies that the limitations depending on the reason for leave needed are $511 per day and $5,110 in the aggregate for
, or $200 per day and $2,000 in the aggregate for
We will continue to monitor developments surrounding COVID-19 as they pertain to employers and will provide updates as appropriate. If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at (818) 508-3700, or visit us online at
Richard S. Rosenberg
Katherine A. Hren
Stephanie B. Kantor
Ballard Rosenberg Golper & Savitt, LLP