Enhanced Unemployment Insurance Provisions
The CARES Act, now passed by the House and Senate and expected to be signed by the President changes the unemployment system and created a pandemic unemployment assistance program. For weeks of unemployment, partial unemployment, orinability to work caused by COVID-19 between January 27 and December 31 the act provides covered individuals with unemployment benefit assistance when they are not entitled to any other unemployment compensation or waiting period credit. This includes self-employed and other workers, such as independent contractors, who have not previously been included in the unemployment system. The weekly benefit amount is generally the amount determined under state law plus an additional $600 for up to 39 weeks (which is notably longer than the typical 26 weeks in most states).
Expanded Coverage and Eligibility
Individuals are eligible for these benefits if they self-certify that they are able to work and available to work and are unemployed, partially unemployed, orunable to work for one of the following reasons:
- The individual is diagnosed with COVID-19 or experiencing COVID-19 symptoms and seeking medical diagnosis;
- A member of the individual’s household was diagnosed with COVID-19;
- The individual is caring for a member of their family or household who was diagnosed with COVID-19;
- A child or person for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school/facility is required for the individual to work;
- The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of COVID-19 public health emergency;
- The individual is unable to reach the place of employment because a health care provider advised to self-quarantine due to COVID-19 related concerns;
- The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;
- The individual became the breadwinner or major support because the head of household died from COVID-19;
- The individual quit as a direct result of COVID-19;
- The individual’s place of employment is closed as a direct result of COVID-19 public health emergency; or
- The individual meets additional criteria established by the Secretary of Labor.
The act also expands unemployment to also cover those who traditionally are not eligible. Excluded are those who have the ability to telework with pay or if they receive paid sick leave or other paid leave benefits.
These provisions are all based upon states entering into agreements with the Federal Agencies. The states are then reimbursed for the costs of the unemployment benefits paid pursuant to these new rules.
Extended Unemployment Provision
The CARES Act also provides for extended benefits for up to 13 weeks after the end of the State maximum (currently 16 weeks in Arkansas).
These extended benefits are only available to people who are unemployed, but are able to work, available to work and are actively seeking work.
Employee Retention Tax Credit
The CARES Act provides private employers andnon-profit organizations a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. This tax credit is not available to employers that receive an SBA loan pursuant to the Act.
For employers with more than 100 full-time employees, the credit is based on the wages paid to employees when they are not providing services due to the COVID-19-related closure. For employers with fewer than 100 full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of wages paid to an employee, including health benefits. The credit is effective for wages paid after March 12, 2020, and before January 1, 2021.
Delay of Employer Payroll Taxes
The CARES Act allows employers and self-employed individuals to defer payment of the employers’ share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees.