COVID-19 Information Center

Federal Unemployment Insurance Benefits: Summary
Published: April 13, 2020
Raphael Moore, J.D., LL.M.
VIN General Counsel

The Coronavirus Aid Relief, and Economic Security (CARES) Act, along with providing various loan relief packages to employers suffering injury or uncertainty due to the COVID-19 pandemic, expanded unemployment insurance (UI) benefits. While details depend on the rules of individual states, the following summarizes three new federal programs and discusses how their benefits are coordinated and how the type and amount of benefits may depend on states' programs. It encompasses references from the CARES Act and federal guidance that followed, including a clarification issued on April 9 by the U.S. Department of Labor (DOL). We also provide a reference table to guide applications for UI benefits, with information on state-specific UI benefits related to COVID-19.

Pandemic Unemployment Compensation (PUC)

The PUC, addressed in Section 2104 of the CARES Act, increases the amount of UI benefits by $600 per week for those who are otherwise eligible for and receive UI benefits from their state. This increase is available for weeks of unemployment that begin after the date on which a state enters into an agreement with the DOL to provide these benefits (all states did as of March 28), and runs through July 31. The $600 is not prorated in any way and is not dependent on pay rate: This is a flat amount to be paid to all who receive UI in their state.

The DOL clarified that PUC benefits are available to those collecting regular UI state benefits, as well as those getting benefits from various other state programs (like short- term compensation programs in states that have them). Indeed, the DOL noted that "if the individual is eligible to receive at least one dollar ($1) of underlying benefits for the claimed week, the claimant will receive the full $600" of PUC.

Because the PUC is not payable for weeks of unemployment that end after July 31, the DOL noted that in states where the unemployment week ends on a Saturday, the last week for PUC benefits will be the week ending July 25. If the unemployment week ends on a Sunday, the last week will be the one ending July 26.

Pandemic Emergency Unemployment Compensation (PEUC)

While the PUC provides an extra $600 per week, provisions for PEUC in Section 2107 of the CARES Act lengthen the time during which eligible workers can receive UI benefits. It adds 13 weeks of state benefits after existing state benefits run out, through Dec. 31.

Pandemic Unemployment Assistance (PUA)

Finally, Section 2102 of the CARES Act establishes a PUA program, which extends federal UI benefits to those who are not traditionally eligible for state UI benefits. It provides up to 39 weeks starting on or after Jan. 27, and ending Dec. 31 of this year, and includes certain workers affected by COVID-19. It covers independent contractors, self-employed people, those with part-time employment, and employees with limited work histories. PUA benefits apply to those who:

  1. are diagnosed with COVID-19 or those experiencing symptoms and seeking diagnosis. This category includes:
    1. individuals who tested positive or have been diagnosed by a health-care provider, and had to quit as a result;
    2. those who, on the advice of a medical health professional, have to quit in order to quarantine after coming in contact with someone who tested positive or someone who has been diagnosed by a medical professional as having COVID-19;
  2. must take care of a household member diagnosed with COVID-19.
    1. This applies when the household member requires ongoing and constant care, such that performing other work functions is severely limited.
    2. This does not apply when the family member can adequately care for themselves.
  3. are unable to work due to having a child subject to school or care closure;
  4. can't get to work because of a quarantine order (e.g., going to work would require violating a state or local order restricting travel);
  5. are self-quarantined upon the advice of a health-care professional;
  6. were scheduled to start work but lost their job or are unable to get to work. This includes:
    1. where the individual cannot get to work because doing so would require violating a state or local order restricting travel;
    2. where the individual lost a job because the employer has rescinded the job offer as a direct result of COVID-19;

  7. have become the head of household or main income-earner because the head of household died from COVID-19;

  8. are forced to quit because of COVID-19; or
  9. have had their place of employment closed because of COVID-19.

To trigger coverage under the above categories, you submit a "self-certification" that you are unable to work when you apply for UI through your state system.

The DOL reminds both applicants and states implementing the program that many of the above criteria may be short in duration, and so the PUA benefits may not last for the maximum 39 weeks allowed (e.g., a local government quarantine may be lifted, making it possible to get to work; or a school's closure ends on the date when the school year originally was scheduled to end).

Note also that some of the above categories are covered under the Families First Coronavirus Response Act (FFCRA). The UI benefits under the CARES Act do not cover those who are receiving paid sick leave or other paid benefits, even if they meet the above criteria, unless the paid-leave benefits are for less than their customary workweek wage. Employees cannot receive UI benefits if they can telework for full pay but the PUA is available for those who are working less than normal and receiving reduced pay.

The DOL provided guidance on how those with limited work history could apply. Specifically, the clarification noted that an individual who was recently hired but who does not have sufficient wages in covered employment during the past 18 months to establish a claim under regular unemployment compensation, but who became unemployed or partially unemployed because of one of the COVID-19 reasons described above, would be eligible for PUA benefits. This should help those who only recently entered the workforce.

In applying the PUA to independent contractors, the DOL notes they

"may also qualify for PUA benefits if he or she is unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited his or her ability to continue performing his or her customary work activities, and has thereby forced the individual to suspend such activities."

The application process will be state-dependent, and some states will not roll out their program for self-employed individuals for another few weeks. In any case, those eligible should expect to provide evidence of past income. If they have prepared 2019 income tax returns, they should use those as evidence. If not, they can expect to be required to provide proof through IRS Form 1099s received for work done last year. The amount of benefit is likely to be calculated using a formula from the Disaster Unemployment Assistance Program. The DUAP is a program that was created in the early 1970s, and although the program itself is not being used for this pandemic, it is probable that a formula from the DUAP will be used to calculate PUA benefits for those who are self-employed. The DUAP looks to the most recent full tax year (i.e., 2019) to figure wages, and a few states that have already started calculating benefits for the self-employed are requesting 1099 statements in the absence of 2019 tax returns (e.g., Iowa and New York).

State Application, Coordination of the Above Benefit Programs, and Open Issues

It is critical to understand that whether or not, and how, those eligible can benefit from the federal UI program depends a lot on their state programs. If in doubt, apply if you can — but note that many states have not yet developed all the necessary system programming, forms, processes and procedures to handle the new benefits. The bulk of online application sites provide information as to when and how to apply, as systems get updated.

Also note that there are lots of open questions that will be answered as states roll out the full UI program to match the new federal guidelines. That being said, the federal government did issue guidance and direction in attempt to promote some unified application. The following attempts to provide a bit of additional clarification, while also pointing out some of the unknowns.

  1. The benefits are available only under the "fundamental eligibility requirements" of the UI program. While states have the latitude to amend their own UI rules to provide flexibility regarding various impediments to obtaining UI benefits, including any requirements that individuals search for work to receive benefits when they are unable to search because of the pandemic, the integrity of the program must be maintained. For instance, the DOL reminds everyone that "quitting work without good cause to obtain additional benefits" constitutes fraud, and emphasizes that "individuals are only entitled to benefits if they are no longer working through no fault of their own."

  2. To obtain benefits, individuals must follow a specific application order.
    1. First, apply and be awarded state UI benefits. Once awarded such benefits, the additional $600 per week under the PUC can be received.
    2. Second, once that first step is taken and all of their state benefits used up, they can be eligible for extended compensation of up to 13 weeks more under the PEUC. But because the $600 per week is available only through the end of July, the rest of the period will be reduced to normal state benefit levels.
    3. Third, if their state has its own "extended benefit" system, they can apply for that once they have exhausted the PEUC extended benefits.
    4. And finally, eligible individuals can apply for the PUA UI benefits if they are still eligible at that point. If their state has no extended benefits program, or if they are not eligible for regular state UI benefits, they can skip steps a, b and c, and go straight to the PUA benefits.
  3. To help speed the receipt of funds, the CARES Act waives any state’s one-week waiting period that normally applies for state UI benefits.

  4. The PUC-added payment of $600 is taxable income. Any child support obligations will be deducted from it, just as with regular UI benefits.

  5. In states that allow UI for reduced hours, an employee may receive a windfall by getting the PUC on top of their regular reduced pay. This issue was argued in the Senate but an amendment to limit UI benefits to no more than the amount an individual would otherwise receive in wages did not pass.
  6. Because there is so much uncertainty in how UI benefits will apply, I don't recommend employers provide advice to their employees. Instead, they should refer employees to the state UI office to apply. The employer should then reply in a timely fashion when contacted by the UI office as to the reason of the employee’s reduced/ eliminated hours.
  7. While the PUC is 100% federally funded, many states are modifying existing laws to automatically recognize COVID-19-related unemployment and partial unemployment as events that will not be charged to employers' UI accounts. It remains to be seen how the UI benefits will be reflected on employers' future UI rates.