Although states are beginning to ease restrictions related to the COVID-19 pandemic, many employers and workers continue to deal with the massive toll the pandemic has taken on the workforce.
The pandemic has caused an upswing in unemployment, with the national unemployment rate increasing to 14.7% as reported by the federal Department of Labor on May 8, and the state unemployment rate up to 5% in March and 10.2% in April. Many workers have had to turn to unemployment insurance (UI) benefits as their main source of income.
In addition to the normal state UI benefits available, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) has provided a much-needed expansion for workers unable to work for reasons related to COVID-19.
The CARES Act creates three new unemployment programs: (1) Federal Pandemic Unemployment Compensation (FPUC), (2) Pandemic Emergency Unemployment Compensation (PEUC), and (3) Pandemic Unemployment Assistance (PUA).
These programs provide expanded benefits such as an extra $600 in weekly benefits to workers drawing any type of unemployment compensation through July 31, 2020, (FPUC), 13 weeks of benefits in addition to the normal 26 weeks of benefits available (PEUC), benefits for workers such as self-employed individuals and independent contractors who have not normally been able to receive UI benefits (PUA), and funding of states’ shared work programs through Dec. 31.
Arkansas DWS’ Implementation
The Arkansas Division of Workforce Services (DWS) has been busy distributing UI benefits and implementing the expanded benefits under the CARES Act — so much so that it has developed an additional website with unemployment resources for employers and workers at arunemployment.com.
One of the first statements employers and workers see on the website is that workers do not need to apply or call about the additional $600 from the FPUC program — it is automatically added to workers’ weekly claim benefit, regardless of the employee’s earnings or benefit amount.
Implementation has not been without its issues though. For instance, the website for self-employed individuals, independent contractors, gig workers and others who have not normally been eligible for UI benefits to apply for benefits from the PUA program was shut down for a short time after the discovery of a vulnerability in the website’s security and possible exposure of applicants’ private information. After some work, the website is back up and accepting applications again.
Things for Employers to Consider
As employers continue to navigate this pandemic, here are some things to keep in mind when managing their workforce and possible unemployment issues with the expansion of benefits:
► Effective April 27, employers are now required to notify employees who are terminated, laid off or temporarily laid off or furloughed of the UI benefits available to them. The model notice can be found here. The notice can be delivered in writing, by text or by email.
► Employers are still able to pay up to 100% of an employee’s health insurance costs without reporting those payments as wages when filing their quarterly contribution and wage reports (209b) for state unemployment insurance tax. On a related note, employees also do not have to report the value of health insurance costs paid by their employees as additional gross earnings.
► While in most cases UI benefits paid as a result of a layoff are charged to an employer’s DWS account, the DOL has issued guidance that states may not charge employers for the extra $600 or the extra 13 weeks of benefits as to impact an employer’s experience rating.
► Workers whose hours or pay have been reduced are eligible to receive UI benefits at a reduced rate along with the extra $600 provided by the FPUC.
Shared Work Program
For employers who are still facing a necessary reduction in force, the DWS Shared Work Program may be a reasonable alternative.
The program allows an employer to divide available work or hours of work among a specific group(s) of employees in lieu of a layoff and still allows those employees to receive a portion of UI benefits while working reduced hours. Employers can participate in the program for up to 26 weeks and may end participation in the program with one week’s notice.
To participate, employers must apply to the DWS and include a list of the possibly affected employees’ names and proposed reductions. The proposed reductions have to be at least 10% of the employees’ normal working hours. But the employer cannot have had a temporary layoff of the affected group within the four-month period preceding their application for the program. Exempt, non-exempt, salaried and hourly employees are all eligible, although employers should watch for FLSA issues especially related to their exempt employees. Upon approval, the employees should then individually apply for UI benefits.
With the federal funding of the program, the state may not charge employers as to affect their experience rating. And employees who are included in the shared work program will still be able to receive the extra $600 in addition to their state UI benefits.
Getting Employees Back to Work
Finally, with restrictions easing up, many employers will need to call their temporarily furloughed and laid off employees back to work. This could be difficult since employers are now competing with the expanded UI benefits.
The thing for employers to keep in mind is that one of the qualifications for employees to receive UI benefits is that they have to be available to work. Rejecting an offer to return to work without a valid reason related to COVID-19 will normally disqualify them from receiving UI benefits.
Particularly, the DOL has stated that “[b]arring unusual circumstances, a request that a furloughed employee return to his or her job very likely constitutes an offer of suitable employment that the employee must accept.” Therefore, employers should update the DWS in the event an employee who is drawing UI benefits refuses an offer to return to work.