An important component of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act significantly expands unemployment insurance (UI) benefits for U.S. workers impacted by the coronavirus outbreak.
The legislation increases the amount of weekly unemployment assistance workers receive; extends how long they can receive it; and expands eligibility to nontraditional workers such as independent contractors, gig workers and the self-employed.
"That's a major change," said Wayne Vroman, a labor economist focused on unemployment insurance and an associate at The Urban Institute, a Washington D.C.-based economic and social policy think tank. "Overall, it's quite generous legislation in terms of allowing all types of workers to collect unemployment benefits compared to what we've seen in response to all previous recessions going back to when public unemployment insurance first appeared [in the 1930s]."
The expanded unemployment assistance comes as millions of workers file new jobless claims and struggling businesses continue to furlough or lay off employees.
Nearly 10 million U.S. workers
filed for new unemployment benefits in the last two weeks of March, according to the Department of Labor (DOL). No previous single week had ever approached 1 million claims.
Larger Checks for a Longer Time
Traditionally, unemployment benefits vary by state.
"Each state determines its own UI eligibility levels, benefit payments and duration of benefits, and there is a vast discrepancy among the states," according to the law firm Epstein Becker Green.
For example, the maximum weekly benefit payment in Connecticut is $631, while in Florida it's $275. The duration of benefits in Connecticut, New Jersey and New York is 26 weeks, while in Florida it's 12 weeks.
In January 2020, unemployed workers nationally were paid an average of $385 per week, and most benefits lasted 26 weeks, according to the Center on Budget and Policy Priorities.
Under the CARES Act, workers will be paid an additional $600 per week on top of what they would normally receive, through July 31.
"When we approach the end of July, there will be a lot of impetus to extend the increase," Vroman said. "There's never been anything like it in the past. During the last recession, additional emergency benefits for the first two years paid $25 on top of the usual benefits."
The stimulus package also provides an additional 13 weeks of unemployment assistance for those who remain unemployed after state funds are no longer available, providing nearly 10 months of financial assistance in total, through Dec. 31, 2020.
Workers who have been unemployed since January 27 will be able to receive the additional $600 weekly benefit and 13-week extension. Anyone receiving unemployment assistance and currently coming to the end of their benefits period can reapply for the additional coverage.
Aid for Workers Typically Excluded
Notably, the legislation provides income support to many workers who are typically shut out of their state UI systems, including self-employed workers, independent contractors, freelancers, part-time workers and those with insufficient work histories to qualify for state UI benefits.
Furloughed employees and anyone who can't report to work because the worksite has been ordered closed as a result of the COVID-19 outbreak will be covered under the expansion. Unemployment benefits will also be extended to people who:
- Have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis.
- Are living with someone who has been diagnosed with COVID-19.
- Are providing care for someone diagnosed with COVID-19.
- Are providing care for a child who can't attend school because it is closed due to COVID-19.
- Are quarantined or have been advised to self-quarantine.
- Had to quit their job as a direct result of COVID-19.
"The result is that many who historically could not obtain unemployment compensation are now eligible to receive up to 39 weeks of benefits fully funded by the federal government," according to Epstein Becker Green.
The Pandemic Unemployment Assistance program is modeled after a disaster relief program administered by the Federal Emergency Management Agency (FEMA) in the wake of natural disasters. The DOL issued
new guidance April 2 to aid states in implementing the expanded unemployment insurance benefits and new benefits for gig workers provided in the CARES Act.
Independent contractors or freelancers who apply to be recipients of the aid generally are required to provide evidence of past income, usually a 1099 tax form from the previous year, Vroman said. "There's $1 billion going to the states specifically for beefing up UI administration, staffing and IT, but it's going to take a while to gear up to meet the expected volume of claimants."
Many state labor department offices have been overwhelmed with activity in recent weeks, resulting in website crashes and long waiting times to contact an administrator.
Rachael Kohl, a University of Michigan law professor who leads the school's Workers' Rights Clinic representing UI filers, said Michigan is dealing with more than 60,000 calls a day and processing more than 100,000 new unemployment claims per week, even before it expands the system to accommodate nontraditional filers.
Many states have said they need more time to set up a new system that can process additional benefits and may not be able to accept applications until later in April.
Provide input as the DOL develops further guidance on the Families First Coronavirus Response Act. Participate online at https://ffcra.ideascale.com through April 10—an extended deadline.