Hunton Employment & Labor Perspectives

The U.S. Department of Labor (“DOL”) issued supplemental CARES Act guidance  on May 8, 2020, that addresses the interplay between the Federal Pandemic Unemployment Compensation (FPUC) program and partial unemployment benefits at the state level.  The FPUC program is the portion of the CARES Act that enhances state unemployment insurance benefits by $600 each week a claimant is eligible for state benefits.  That program is in effect only between the week ending April 4, 2020 and the week ending July 31, 2020.

As states have worked to process the millions of unemployment claims arising out of the pandemic, many questions have arisen about who is eligible for the federal Pandemic Unemployment Assistance (PUA) benefit under the CARES Act.  The Department of Labor’s most recent guidance attempts to answer many of these questions posed by the states and may be helpful to employers considering furloughs or layoffs.

As state unemployment agencies are inundated with new claims, the US DOL recently provided instructions to states for implementing the Pandemic Emergency Unemployment Compensation Program (PEUC) of the CARES Act in its April 10, 2020 guidance.  PEUC allows states to enter into agreements with the Secretary of Labor to pay up to 13 weeks of unemployment benefits to eligible individuals, through December 31, 2020.  We highlight the important takeaways below.

Unemployment compensation is a federal-state program that provides benefits to eligible workers who become unemployed through no fault of their own. Under the system, the IRS collects from employers an annual payroll tax pursuant to the Federal Unemployment Tax Act (FUTA). The states also collect a payroll tax on a quarterly basis, which they use to pay benefits. The states are permitted to determine their own benefit eligibility requirements, the amount and duration of benefits and set the tax structure for employers so long as their standards do not conflict with federal law.