United States: How The Consolidated Appropriations Act Impacts Unemployment Compensation Benefits

On December 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021, an omnibus spending bill that authorized additional funding and extended supplemental unemployment benefits created by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. We previously blogged about the supplemental unemployment benefits provided by the CARES Act here. The appropriations bill, weighing in at more than 5,500 pages, covers a lot of ground, and this post is limited to discussing how it impacts unemployment compensation benefits through a section called the Continued Assistance for Unemployment Workers Act of 2020 (“Continued Assistance Act”). In addition to this post, we encourage any interested readers to review a UIPL released by the Department of Labor on December 30, 2020, which you may access here.

To recap, the CARES Act supercharged normal unemployment compensation by increasing monetary payments, extending the number of weeks individuals could be eligible for unemployment compensation, and including previously excluded groups, such as independent contractors and individuals without sufficient employment histories. The Continued Assistance Act generally extends those benefits through the following programmatic changes.

Federal Pandemic Unemployment Compensation Reinstated, Cut to $300 Per Week, Optional Program Added

The Continued Assistance Act reinstates Federal Pandemic Unemployment Compensation (“FPUC”), which provided a $600 per week supplemental payment until its expiration on July 31, 2020. The renewed FPUC now provides a $300 payment for up to 10 weeks between December 26, 2020 and March 14, 2021. This supplemental payment, like the original $600 payment available under the CARES Act, is available to any individual who receives at least $1 of state unemployment benefits.

In addition to reauthorizing FPUC, the Continued Assistance Act also creates a new program for Mixed Earners Unemployment Compensation (“MEUC”). The MEUC program is an optional $100 per week supplement to FPUC for individuals who: (1) have received at least $5,000 of self-employment income in the most recent taxable year; (2) are receiving a form of unemployment compensation other than Pandemic Unemployment Assistance; and (3) submit documentation substantiating the claimed self-employment income. MEUC payments are available for weeks of unemployment between December 27, 2020 and March 14, 2021. 

Pandemic Emergency Unemployment Compensation and Pandemic Unemployment Assistance Extended

The Continued Assistance Act also increases the duration and availability of Pandemic Emergency Unemployment Compensation (“PEUC”), a program that provides continued unemployment benefits for individuals who have exhausted their state unemployment benefits, and Pandemic Unemployment Assistance (“PUA”), which extends unemployment compensation to independent contractors, individuals without a sufficient work history, and other populations unable to access traditional unemployment compensation.

Both PEUC and PUA are extended through April 5, 2021, though no new applicants will be eligible for weeks after March 14, 2021. Individuals who are already receiving PEUC and PUA who have not yet exhausted their entitlement under these programs will remain eligible for benefits through April 11, 2021.

The Continued Assistance Act also increases the maximum total benefits from 39 weeks to 50 weeks. The additional 11 weeks of benefits are collectable only for weeks of unemployment on or after December 27, 2020, so claimants may not request unemployment compensation if they had any benefit-free weeks due to exhausting available benefits prior to the passage of the Continued Assistance Act.

Forgiveness Mechanism for Overpayment

To be eligible for PUA, an individual must have exhausted his or her right to regular unemployment compensation, PEUC, and extended benefits. The Continued Assistance Act creates a “safe harbor” for individuals who previously exhausted PEUC and are now receiving PUA, but who become eligible for additional PEUC as a result of this legislation. The mechanism for correcting and characterizing these payments will be subject to additional rulemaking, and there may be administrative difficulties related to transitioning claimants from PUA to PEUC and then back to PUA.

Certification Requirements and Fraud Prevention Mechanisms

The Continued Assistance Act also takes aim at two criticisms lodged at expanded unemployment benefits: that it encourages fraud and that employees are disincentivized from returning to work.  To combat fraud, the Continuing Assistance Act requires a claimant to substantiate earnings and employment (as opposed to providing only a self-certification) and directs states to implement a process to verify the claimant's identity.

For individuals filing PUA claims on or after January 31, 2021, the claimant must provide documentation substantiating employment or self-employment. Claimants must also provide a self-certification that their unemployment, partial unemployment, or inability to work are attributable to a qualifying reason under the CARES Act and identify the specific reason for each week that PUA is claimed. In addition to these claimant-based obligations, States must prepare and implement procedures for identity verification to validate PUA claims.

The Continued Assistance Act requires States to have a method to address circumstances where an individual refuses to return to work or refuses to accept suitable work without cause. The Act does not dictate what States must do to address this situation when it occurs—only that employers must have some avenue to notify the state agency overseeing unemployment compensation that a work refusal occurred. And the Act does not directly require employers to report work refusals. However, employers should be aware that, under existing law, they may not be able to certify for employment benefits an employee that refuses to accept work assignments. Those state-specific certification requirements remain in place, and employers should continue to follow them.

Finally, the Continued Assistance Act also directs States to provide a plain-language notice to claimants about the consequences of refusing to return to work or of failing to accept an offer of suitable work. This notification obligation is a state government obligation, so employers need not modify any existing notices regarding the availability of unemployment benefits.

Conclusion

The Continued Assistance Act generally extends the benefits created by the CARES Act while introducing new tools to help States combat fraud or false certifications by claimants. Please do not hesitate to contact us if you have any questions about unemployment compensation benefits or how those benefits have been altered by the Continued Assistance Act.

Originally Published by Seyfarth Shaw, January 2021

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.