Who Needs to Know
All employers attempting to recall or hire employees currently receiving unemployment insurance benefits who may be eligible for extended benefits, and employers who may conduct future furloughs, layoffs, or job eliminations.
Why It Matters
DOL’s guidance explains the extension of COVID-19 unemployment benefits and the additional requirements imposed on individuals and states under the new law.
As previously covered, of the many programs and initiatives included in the $900 billion Consolidated Appropriations Act, 2021 (CAA), some of the most pertinent for employers included extensions of federal unemployment insurance benefits related to COVID-19. Now, DOL provides additional guidance to states implementing the programs in the form of three updated Unemployment Insurance Program Letters (UIPL) offering insight into how the extensions will work in practice.
Pandemic Emergency Unemployment Compensation (PEUC)
On December 31, 2020, the DOL issued Change 2 to UIPL 17-20 Change 2 on Pandemic Emergency Unemployment Compensation (PEUC). The UIPL confirms that because the PEUC provisions in the CAA apply “as if these provisions were included in the CARES Act,” the program is subject to previous DOL guidance, and states do not have to enter into a new agreement with the federal government to offer the extended benefits.
Under the PEUC program, individuals who newly establish PEUC eligibility are now entitled to an additional 24 weeks of unemployment benefits, while previously established individuals who exhausted their accounts, are eligible to receive an additional 11 weeks. The UIPL is clear that no PEUC benefits are payable for weeks of unemployment before the enactment of the law on December 27, 2020 — so even if an individual could have been eligible for PEUC before that date, they will not receive payment for weeks prior to December 27, 2020.
The extended PEUC benefits are payable for weeks of unemployment ending on or before March 14, 2021. So in states with a week of unemployment ending on a Sunday, the last compensable week before the PEUC program expires is the week ending March 14, 2021; in states with a week of unemployment ending on a Saturday, the last compensable week under the PEUC program is the week ending March 13, 2021.
Under the CARES Act, an individual must exhaust regular state UEC eligibility before being eligible for PEUC. Now, an individual qualifying for a new benefit year of regular state UEC benefits under the CARES Act would no longer be eligible for PEUC. The CAA confirmed an exception to this result: An individual with a benefit year that expires after December 27, 2020, but still has remaining eligible PEUC eligibility, can continue to receive PEUC instead of UEC so long as the regular UEC payments in the new benefit year would be at least $25 less per week than the benefits to which the individual was entitled in the prior benefit year.
The UIPL outlines four options for coordinating PEUC with regular UEC for states to select. A state must select one option to apply to all claimants.
Transition Period Through April
The PEUC provides a phase-out program, meaning that even though entitlement to extended benefits expires as of weeks of unemployment ending on March 14, 2021, “individuals who have not exhausted their PEUC accounts as of March 14, 2021, are receiving PEUC with respect to the week ending March 13 or 14, 2021, and are otherwise eligible, may continue to be paid for weeks of unemployment for weeks beginning on or before April 5, 2021.”
Federal Pandemic Unemployment Insurance (FPUC) and Mixed Earner Unemployment (MEUC)
On January 5, 2021, the DOL issued UIPL 15-20, Change 3 regarding the extension to the popular Federal Pandemic Unemployment Insurance (FPUC) benefits and the new Mixed Earners Unemployment Compensation (MEUC) program.
The guidance confirms that the CAA’s extension of the CARES Act FPUC benefits is subject to the same program parameters, including those parameters clarified in the initial UIPL 15-20, as well as both Change 1 and Change 2 to that letter, which we’ve previously covered here.
The UIPL offers confirmation on the program’s effective dates, specifically:
- In states with a prior agreement in place to administer the FPUC program, where the week of unemployment ends on a Saturday, the first week for which FPUC becomes payable at the $300 amount is the week ending January 2, 2021, and the last week of unemployment for which FPUC may be paid is the week ending March 13, 2021.
- In such states, where the week of unemployment ends on a Sunday, the first week for which FPUC becomes payable at the $300 amount is the week ending January 3, 2021, and the last week of unemployment for which FPUC may be paid is the week ending March 14, 2021.
The guidance makes clear FPUC is not payable for any of the weeks in between the CARES Act expiration and the CAA’s enactment, meaning that no additional federal supplement is available for any weeks ending after July 31, 2020 through weeks ending on or before December 26, 2020. Further, unlike PEUC and PUA benefits, there is no phase-out period. Thus, FPUC is not payable for weeks of unemployment during the phase-out period through April 5.
The MEUC program allows individuals who have received at least $5,000 of self-employment income in the most recent taxable year to receive an additional $100 per week in supplemental federal benefits if they are eligible for at least $1 in underlying state benefits. The guidance confirms that the new MEUC program is optional — states must enter an addendum to their FPUC agreement to offer it. States initially deciding not to offer it were required to inform the DOL of this decision by January 2. States may elect to implement MEUC at a later date. If states elect not to implement the MEUC program initially, but later do decide to implement it, MEUC would become payable only after the week of unemployment beginning on or after the date of the election.
The MEUC program is governed by all the same guidelines as FPUC, including that the federal government will pay for 100% of all MEUC benefits. But unlike FPUC, mere entitlement to $1 in underlying weekly benefits alone is not enough — the individual must also provide documentation of their self-employment income. Further, individuals receiving PUA may not receive MEUC benefits.
Unlike FPUC, the MEUC program includes no carveout for Medicaid and the Children’s Health Insurance Program. Thus, MEUC payments may be considered income that could affect an individual’s eligibility for these programs.
State Notification Requirements
States must notify individuals potentially eligible for MEUC — either individually by claimant or by including screening questions on initial applications for benefits, as well as by mass communication. Additionally, existing claimants need to receive notification if they have potential eligibility for MEUC — the guidance provides a form communication.
Like FPUC benefits, MEUC payments may be made to eligible individuals starting with the week of unemployment beginning on December 27, 2020, through the week of unemployment ending on or before March 14, 2021. Like FPUC, there is no phase-out period for MEUC benefits.
Pandemic Unemployment Assistance (PUA)
On January 8, 2021, DOL issued UIPL 16-20, Change 4 regarding the extension of PUA benefits under the CAA. The guidance clarifies the duration of benefits and includes a number of modified requirements for individual eligibility and state administration.
PUA benefits are payable to individuals not eligible for regular unemployment compensation, extended benefits, or PEUC, whether due to prior exhaustion of those benefits or ineligibility, including self-employed individuals or those lacking sufficient work history. PUA benefits also may be provided to those who are partially unemployed.
As with other unemployment benefits under the CAA, the PUA program is extended until the week of unemployment ending on or before Saturday, March 13 or Sunday, March 14, 2021, depending on how the state defines its benefit week. However, as with the PEUC extended benefits, those receiving benefits as of the expiration date who would otherwise have a right to continuing PUA benefits, can receive benefits under a phase-out period ending on April 5, 2021.
While the PUA program generally requires backdating an individual’s benefits claim to the first week of the individual’s eligibility during the Pandemic Assistance Period, the CAA limits backdating so that any claim filed after December 27, 2020 cannot be backdated any earlier than December 1, 2020.
This UIPL also confirms that the maximum period of PUA benefits increased from 39 to 50 weeks, but will continue to be reduced by any week of regular unemployment compensation and extended benefits that an individual receives during the Pandemic Assistance Period.
Additional Requirements on Individuals and States
Some new requirements were also imposed on individuals and states administering PUA benefits.
Beginning on January 31, 2021 (regardless of whether the claim is backdated), individuals applying for PUA benefits must submit documentation substantiating their employment or self-employment as early as three weeks after filing their application for benefits. Those who applied for PUA benefits prior to January 31, 2021, and have received benefits under the CAA, will have a longer period of time to submit documentation of employment or self-employment, which could be as soon as 90 days from the date of their application for benefits.
In addition, beginning on or after January 26, 2021, individuals will need to provide self-certification that their eligibility stems from one or more COVID-19-related reasons defined in the CARES Act for each week that PUA is claimed.
The UIPL also authorizes states to waive recovery of an overpayment made to an individual if the state determines that the individual received an overpayment due to no fault of their own and that seeking recovery would be contrary to equity and good conscience. On the other hand, where a state determines an overpayment has resulted from fraud, the UIPL obligates states to apply a minimum 15% penalty on the individual’s receipt of benefits, in addition to other penalties on the individual.
Finally, states must have procedures in place for identifying verification and timely payment of benefits by January 26, 2021. Where the state previously verified an individual’s identity for a PEUC benefits claim within the last 12 months, the state will not need to re-verify the individual for a subsequent claim for PUA benefits.