Enhanced Unemployment Compensation Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act

In two previous Legal Updates, we addressed the Unemployment Insurance benefits in Wisconsin and the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As our prior article on Unemployment Insurance benefits was drafted before the passage of the CARES Act, this Legal Update will provide additional information regarding those provisions of the CARES Act that modify and enhance Unemployment Insurance benefits afforded to Wisconsinites.

Under Wisconsin law, individuals are eligible for a maximum of $370 per week for up to 26 weeks of Unemployment Insurance benefits. The total weekly benefits that an individual may receive is referred to as their weekly benefit rate (WBR). The CARES Act enhances these benefits in two ways:

1) Individuals are eligible for an addition 13 weeks of Unemployment Insurance benefits, providing up to 39 total weeks of benefits; and

2) Individuals are eligible to receive an additional $600 per week through July 31, 2020.

Many employers and individuals have questions regarding whether the additional $600 per week of benefits is prorated based on an employee’s prior earnings. The CARES Act makes it clear that this $600 enhancement is not prorated. An individual who would otherwise be eligible for Wisconsin Unemployment Insurance benefits will receive $600 per week in additional benefits through July 31, 2020, irrespective of their WBR. Therefore, an individual with the maximum WBR of $370 will receive $970 per week through July 31, 2020, and an individual with a WBR of $200 will receive $800 per week through July 31, 2020.

In addition to enhancing the benefits of individuals already eligible for Unemployment Insurance benefits in Wisconsin, the CARES Act has created new benefits for individuals not typically eligible for Unemployment Insurance benefits. Unlike traditional Unemployment Insurance, Pandemic Unemployment Assistance (PUA) is available to individuals who are self-employed, independent contractors, or who have limited work history. To be eligible for PUA benefits, individuals must be unemployed or partially unemployed, or unable to work, for one or more of the following reasons related to the COVID-19 pandemic:

1) An individual has been diagnosed with COVID-19 or is experiencing COVID-19 symptoms and seeking diagnosis;

2) A member of the individual’s household has been diagnosed with COVID-19;

3) An individual is caring for a family or household member diagnosed with COVID-19;

4) An individual is the primary caregiver of a child or household member who is unable to attend school or another facility that is closed due to COVID-19;

5) An individual is unable to reach their place of employment due to an imposed quarantine or was advised by a medical provider to self-quarantine due to COVID-19;

6) An individual was scheduled to commence new employment and does not have a job or cannot reach the job as a direct result of COVID-19;

7) An individual became the breadwinner or major support for a household because the head of the household died from COVID-19;

8) An individual has to quit a job as a direct result of COVID-19; or

9) An individual’s place of employment closed as a direct result of COVID-19.

An individual qualifying for PUA benefits will first be entitled to a WBR based on their earnings prior to unemployment. These prior earnings will be treated similar to qualifying wages under traditional Wisconsin Unemployment Insurance. Further, those individuals qualifying for PUA will also receive a maximum of 39 weeks of Unemployment Insurance benefits with an extra $600 per week through July 31, 2020.

At this time, the Wisconsin Department of Workforce Development (DWD) has issued the following guidance for individuals filing unemployment claims in the wake of COVID-19 that may qualify for PUA benefits:

If you were not eligible for unemployment before the CARES Act (Federal Stimulus Bill) was passed we are asking you to wait* to file because our system is not yet set up to accept your application. We are waiting on additional guidance from [the United States Department of Labor]. We expect those changes to be complete by mid-to late-April. We understand how important it is to get these payments to you as quickly as possible, and we are doing everything we can to get you the help you need.

*It is important to note that benefits will start from the time you became eligible for unemployment, not from the time your application is submitted or approved.

Many public sector employers, along with other employers that pay for unemployment benefits on a reimbursable basis, as opposed to an insurance basis, are concerned about the financial implications of these enhanced unemployment benefits. Fortunately, the CARES Act provides that Federal funds will cover the costs of the additional 13 weeks of unemployment insurance benefits and the additional $600 per week in benefits. These costs will not be passed to employers. However, reimbursable employers are likely to see that their unemployment costs will be higher than expected given the COVID-19 shutdowns. The CARES Act contemplates this scenario and provides relief.

Section 2103 of the CARES Act provides that the federal government shall transfer funds to the states for the purposes of reimbursing state and local governmental entities, certain non-profit organizations, and federally recognized Indian tribes for 50% of their unemployment costs from March 13, 2020, through December 31, 2020. At this time, this much needed relief has not been distributed yet, but DWD has advised that such employers continue paying their unemployment bills in full. DWD is monitoring these accounts and will credit them once these funds are received.