Coronavirus Aid, Relief, and Economic Security Act, aka the CARES act

Update-1 (26 Mar. 2020): the Ways and Means committee just released a FAQ on this bill.

Update-2 (26 Mar. 2020): a comparison of current pandemic relief measures from the Center for Economic and Policy Research and a press release from NELP on the new bill.

Update-3 (26 Mar. 2020): NELP’s description of the bill is now available.

Legislative leaders agreed on a bill, then there were some additional negotiations, and the senate has now passed an 880 page bill. Here is a summary of the unemployment provisions.

New kinds of unemployment assistance

The Act creates a Pandemic Unemployment Assistance (PUA) program which will be available for a large swath of workers who are not otherwise eligible for state unemployment insurance (UI). Eligibility for the program runs from 27 January 2020 through 31 December 2020, so eligibility is retroactive. The total duration of this benefit is 39 weeks.

The Act also creates a Pandemic Unemployment Compensation (PUC) benefit of an additional $600 per week for anyone receiving regular state UI or PUA. PUC will last through 31 July 2020 and will NOT be paid retroactively.

Finally, the Act creates 13 weeks of Pandemic Emergency Unemployment Compensation (PEUC) for those who were classified as employees who have exhausted or will exhaust state UI benefits without finding a new job.

Pandemic Unemployment Assistance (PUA)

Covered individuals here include people who are NOT eligible for regular state UI, including individuals who have exhausted their state UI benefits, including Extended Benefits.

Applicants will need to provide self-certification that they are:

(1) partially or fully unemployed, OR

(2) unable and unavailable to work because of one of the following circumstances:

  • They have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis;
  • A member of their household has been diagnosed with COVID-19;
  • They are providing care for someone diagnosed with COVID-19;
  • They are providing care for a child or other household member who can’t attend school or work because it is closed due to COVID-19;
  • They are quarantined or have been advised by a health care provider to self-quarantine
  • They were scheduled to start employment and do not have a job or cannot reach their place of employment as a result of a COVID-19 outbreak;
  • They have become the breadwinner for a household because the head of the household has died as a direct result of COVID-19;
  • They had to quit their job as a direct result of COVID-19;
  • Their place of employment is closed as a direct result of COVID-19; or
  • They meet other criteria established by the Secretary of Labor.

OR are (3) self-employed (and have lost work), OR

(4) seeking part-time employment (if state law allows for benefits for PT workers) [Wisconsin’s benefit formula encourages part-time work when receiving unemployment benefits, but requires claimants to be looking for full-time work or as much work as possible for that individual given that individual’s physical limitations], OR

(5) do not have sufficient work history to qualify for UI, or otherwise do not qualify for state UI.

People who can telework with pay, and anyone receiving paid sick or paid leave benefits cannot receive PUA.

People eligible for PUA can receive up to 39 weeks of benefits, through 31 December 2020. There is no waiting week for the benefits. The benefits that are paid out as well as expenses for administering this program are covered 100% by federal monies.

PUA benefits are calculated the same way as they are for the federal Disaster Unemployment Assistance program under the Stafford Act (the model for the PUA program). So, there is a minimum benefit amount that is equal to one-half the state’s average weekly UI benefit (about $190 per week on average for all states). Wisconsin’s minimum DUA is $163. The maximum benefit will be $370, Wisconsin’s maximum weekly benefit rate.

Pandemic Unemployment Compensation (PUC)

Through 31 July 2020, all UI and PUA claimants will receive their usual calculated benefits plus an additional $600 per week in compensation. The $600 in extra compensation is NOT retroactive.

The additional $600 per week may be paid either with the regular UI payment or at a separate time at the discretion of the state. But, this benefit must be paid weekly.

The PUC benefits that are paid out as well as administrative expenses are covered 100% by federal monies.

PUC payments are NOT income for purposes of eligibility for Medicaid and CHIP.

Pandemic Emergency Unemployment Compensation (PEUC)

An additional 13 weeks of state UI benefits, tacked onto whatever the state currently offers (all but 8 states offer 26 weeks of UI). Wisconsin currently provides for 26 weeks of benefits, so now 39 weeks of benefits will be available here.

For those who might be eligible for regular benefits in other states, they must first apply for benefits in those other states before receiving PEUC benefits.

Note: This eligibility in other states was a major problem during the last recession and the EUC benefits made available then. Many claimants received EUC benefits only to find six months to a year later that they had to repay those EUC beenfits because they were eligible for regular UI benefits in other state if they had thought to apply for those benefits.

The PEUC benefits that are paid out as well as administrative expenses connected to PEUC are covered 100% by federal monies.

Job search and registration requirements each state has for regular UI benefits remain in place for PEUC benefits. But, “a State shall provide flexibility in meeting such requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”

Claim-filing mistakes, penalties, and repayment

There are fraud penalties for anyone who makes “a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact, and as a result of such false statement or representation or of such nondisclosure such individual has received” these new federal benefits. As DWD alleges fraud when making unintentional claim-filing mistakes and DWD will be administering these federal benefit programs in Wisconsin, folks should exercise extreme caution on this front.

The numerous warnings that begin every Wisconsin claim are there to indicate how aggressive the Department is on this issue. The Department does NOT consider failing to know something or mis-understanding an issue to be an adequate excuse for a claim-filing mistake. In other words, the Department presumes all mistakes are intentional fraud; any admission of a mistake, for the Department, constitutes an admission of guilt.

Note: The penalties for unemployment fraud are sizable. As of January 2020, the program integrity fund in which only a small portion of these penalties are deposited, amounted to $11,726,000 (see line 228). The Department is free to spend these funds as it sees fit.

Repayments that are needed when there are filing mistakes for non-fraudulent reasons can be waived when the over-payment of benefits was without fault of the claimant and repayment would be contrary to equity and good conscience (i.e., an economic hardship on the claimant).

Finally, payment of benefits under these programs can NOT be stopped until “until a determination has been made, notice thereof and an opportunity for a fair hearing has been given to the individual, and the determination has become final.”

Short-Time Compensation (aka work-sharing) (STC)

Federal government will fully reimburse states for all STC programs as defined in Section 3306(v) of the Internal Revenue Code.

Grants will be available to states that already have STC programs to help improve and promote them. Wisconsin already has a work-share program.

Note: What is work-share you ask? In return for maintaining benefits for employees, an employer can keep workers employed at reduced hours. The reduced pay is subsidized with unemployment benefits covering the lost hours of work. The application form spells out the requirements for this program on the third page. For more information or to apply, call the employer contact number at the Department: 608-261-6700.

States that enact conforming STC programs after the date of enactment will also be eligible for funding and implementation/promotion grants.

STC plans entered into by employers must provide that the employer will pay to the State 1/2 of the amount of STC paid under the plan. This money goes into the state UI trust fund. I am unsure of what this provision will mean for Wisconsin employers that adopt a work-share program.

Other provisions

For states that waive their waiting week, all benefits paid for that week as well as administrative expenses will come from federal monies.

There is a “nonreduction rule” — as long as the states are participating in these programs, they may not do anything to decrease the maximum number of weeks of UI or the weekly benefits available under state law as of 1 January 2020.

Reimbursable employers like non-profit and governmental entities will be reimbursed for unemployment benefits paid out to their employees from 13 March 2020 through 31 December 2020. The Dep’t of Labor is supposed to issue guidance that “would provide maximum flexibility to reimbursing employers as it relates to timely payment and assessment of penalties and interest pursuant to such State laws.”

State unemployment agencies have flexibility to hire additional staff through 31 December 2020. They may engage temporary staff, rehire former employees, and retirees, all on a non-competitive basis.

4 thoughts on “Coronavirus Aid, Relief, and Economic Security Act, aka the CARES act

  1. Pingback: Implementing CARES act unemployment provisions | Wisconsin Unemployment

  2. Pingback: Filing problems in Wisconsin are not new | Wisconsin Unemployment

  3. Pingback: Implementation dates for CARES Act unemployment provisions | Wisconsin Unemployment

  4. Pingback: Eligibility for PUA benefits | Wisconsin Unemployment

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