What Happens When Unemployment Pays Too Well?

Furloughed workers may prefer to collect unemployment, but the benefit won’t last

By Cristina Rouvalis May 14, 2020
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​As COVID-19-related restrictions are lifted, companies have started recalling employees to offices and factories around the country. But some are getting a surprising response to the opportunity: "Thanks, but no thanks. I would rather collect unemployment."

Enhanced unemployment benefits—an extra $600 a week—under the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) make working a less attractive proposition for some. With extra caregiving responsibilities as schools and day care centers remain closed, others figure it's more hassle than it's worth to return to a job.

"Some of my clients are trying to recall people, and they don't want to come back," said Scott Warrick, a Columbus, Ohio-based employment attorney and the author of Solve Employee Problems Before They Start (SHRM, 2019). "They say, 'The kids are home. I'm getting half my wages in unemployment. It's not so bad. And I'll get an extra $600 a week.' That's a big windfall."

But there is a flaw with that reasoning. "If you are recalled to work, your unemployment is stopped. It isn't really your choice," he said.

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Lindsey White, an employment lawyer and partner at Shawe Rosenthal in Baltimore, said, "The employees who are saying, 'Thanks for the offer of work, but I would rather stay on unemployment' won't be eligible for unemployment. That is going to be a rude awakening."

Plus, the benefit stops at the end of July. Claims for unemployment after that time will not get the additional $600.

In some cases, though, when employers are considering terminating employees for continued performance issues, the employees will volunteer to be laid off so they can collect unemployment, said Stephanie Weinstein, an employment lawyer with Marcus & Shapira in Pittsburgh. In those cases, the arrangement benefits both parties.

For an employee who might feel too overwhelmed by pandemic-related caregiving obligations to go back to work, there is another option: The Families First Coronavirus Response Act (FFCRA). The law requires employers with fewer than 500 workers to offer 80 hours of paid sick leave for caregiving at two-thirds the employee's regular rate of pay, capped at a maximum of $200 a day or $2,000 total, if the employee is unable to work or telework. Paid sick leave is also available for individuals experiencing symptoms of COVID-19, in quarantine or caring for an individual under quarantine. 

The same law expanded family and medical leave to cover employees who are unable to work or telework because of the closure of a child's school or child care facility. The first 10 days of the 12 weeks of leave are unpaid (although employees can use the paid sick leave to get paid at two-thirds their regular rate for this time). The last 10 weeks are paid at two-thirds of the employee's regular rate, capped at $200 per day or $10,000 total, White said. Employees can take the leave between April 1 and Dec. 31, 2020.

The extended family leave can also apply to people who work remotely. "Let's say an employee's husband can watch the kids in the late afternoon through evening, but the employee normally works later in the day," Weinstein said. "The employee could work with her employer to change her work hours or also possibly take some intermittent leave." The arrangement should work both for her employer and for the employee.

Added White: "If someone is allowed to work from home, you can take family leave intermittently if the employer agrees. For example, the mom can take four hours a day and the dad can take four hours a day, but they can't both be off from 8 a.m. to noon." Instead, they could take leave in shifts to watch the children and help them with schoolwork.

Employees who are not getting their full salary through the FFCRA may be eligible for partial unemployment benefits, White said. Even where an individual receives partial unemployment benefits, he or she will receive the extra $600 payment from the CARES Act.

Weinstein advised employers to post notices of FFCRA benefits in a conspicuous place, per U.S. Department of Labor regulations. Legally, there can be no retaliation against someone who opts to receive these benefits. 

"I encourage my clients to be as flexible as they can be," White said. "It is better for business for the employees to do some amount of work, even if it is not the full amount. Right now, the economy is pretty dismal, but at some point, that won't be the case. Employees will remember how employers handled this crisis, and they will be loyal to the ones that offered flexibility."

Cristina Rouvalis is a freelance writer based in Pittsburgh.

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