Are you eligible for unemployment insurance? Here’s what to know
Laid off or furloughed because of COVID-19? We answer your questions about unemployment benefits.
Unemployment claims are soaring across the United States due to coronavirus-related layoffs and closures. Americans are increasingly worried about how they are going to pay their bills as coronavirus forces businesses to close and costs millions of people their jobs.
To help struggling Americans, Congress passed a $2.2 trillion federal relief (CARES Act), including a big boost to unemployment insurance benefits that allow more people to qualify and offers more money for a longer period of time. In addition to providing additional funds for unemployment insurance overall, the CARES Act includes a new program called Pandemic Unemployment Assistance (PUA), which expands benefits to workers who were previously ineligible, including roughly 16 million Americans who are self-employed, independent contractors and freelancers.
Whether you are laid-off yourself or are a business owner who needs to know what is available for your employees, here’s what workers can expect.
Who is now newly eligible for unemployment?
Unemployment assistance will now extend to self-employed workers, including independent contractors, freelancers, farmers and gig workers. Self-employed workers with a limited liability company (LLC) or S corporation qualify.
This is a major change for many gig workers, who are typically classified as independent contractors and are therefore not eligible to receive employee benefits, paid leave and health care from on-demand gig companies. Gig workers who’ve experienced reduced demand, and therefore reduced earnings, amid the coronavirus outbreak may now qualify for unemployment insurance to partially replace lost wages.
Unemployment will also be extended to individuals seeking part-time work and those who don’t have the sufficient work history (generally one year) previously required to file a claim.
Individuals will need to prove they’ve lost work as a direct result of the pandemic, including reasons such as being diagnosed with COVID-19, being mandated by a health official to quarantine, providing care for someone diagnosed with the virus, providing care to a child who can’t attend school because it’s closed, being scheduled to start a new job that’s now closed or quitting a job as a direct result of the pandemic.
Who doesn’t qualify?
Individuals who are able to work from home with pay and workers receiving paid time off do not qualify for unemployment benefits under the CARES Act.
However, if a teleworker is unable to work due to becoming ill or caring for another person due to the virus, they may become eligible. If a worker has exhausted their PTO and is still out of work, they may qualify for unemployment benefits.
How much money will newly eligible workers get?
Benefits paid out under new program will be modeled after Disaster Unemployment Assistance, which was created in 1974 to provide benefits to individuals who become unemployed due to a major natural disaster, including hurricanes, wildfires and major floods.
Where possible, unemployed workers will receive partial wage replacement (roughly 46% on average) of previous documented earnings.
At minimum, newly eligible workers will receive half the average unemployment benefit in their state. In January 2020, unemployed workers across the country were paid an average of $385 per week, according to the Center on Budget and Policy Priorities. By state, average benefits ranged from $213 in Mississippi to $546 in Massachusetts.
This benefit will last up to 39 weeks, or roughly 10 months, under the stimulus package.
On top of this benefit, unemployed workers will receive an additional $600 per week for dates of unemployment from March 27, the day the CARES Act was signed, until July 31. After that, individuals who are still unemployed will continue to receive their state-administered benefit for the remainder of their 39 weeks.
Let’s say the average worker becomes unemployed on March 27. They will be newly eligible to receive roughly $190 per week (half of the national average) plus $600 per week, for a total of $790 per week for up to four months until July 31. For the remainder of their 39-week benefit window, or until about December 25, they will receive $190 per week.
When can newly eligible workers start filing for unemployment?
While the CARES Act makes these federal funds available to unemployed workers, states still have to individually sign on to the agreement and set up the infrastructure to accept new unemployment claims and pay out increased unemployment benefits.
The U.S. Department of Labor has to issue guidance for states on how to set up these Pandemic Unemployment Assistance benefits. Generally, it takes two to three weeks once someone has applied to actually get approved and start receiving payment. However, given the surge in unemployment claims, it may take longer.
How do you apply for Pandemic Unemployment Assistance?
Each state administers their own unemployment insurance program, so it’s crucial workers check their state department of labor website for the most up-to-date information.
Typically, individuals need to have the following information on hand to file an unemployment claim:
- Social Security number
- Home address and mailing address (if different)
- Telephone number
- Email address
- Bank name, address, account number and routing number for direct deposit
- Employer’s name, address and phone number
- First and last day worked with employer
- Reason for leaving
- Pension or severance package information (if applicable)
Workers are usually asked to provide their earnings history to calculate their unemployment benefit. But self-employed workers, freelancers and independent contractors may not be able to quickly access and compile their previous earnings.
Newly eligible workers should try to organize as much recent pay information as possible to have on hand when they’re filing for unemployment for the first time. Tax documents are a start, but also compile invoices, bank statements, notifications of deposit and other proofs of income for at least the last year.
What if you can’t get through to file a claim?
Many state labor department offices have been overwhelmed with activity in recent weeks, resulting in site crashes and long waiting times to contact someone by phone. To avoid overwhelming websites and phone lines, some states are advising workers file a claim on a certain day of the week based on the first letter of their last name.
When workers do get through, benefits payments will be applied retroactively to workers who have lost their job due to the pandemic as far back as January 27, 2020.
The additional $600 weekly benefit will also be back-dated to March 27.
Expanded unemployment assistance under the CARES Act is effective through December 2020.
What’s the best way to apply?
Apply online. “Every one of the 50 states has an online application system,’’ says Michele Evermore, senior researcher and policy analyst for the National Employment Law Project.
I am a business owner that had to close due to COVID-19. Am I eligible for unemployment?
Under the CARES Act, if you pay yourself a salary or wages in addition to receiving dividends (S-Corp) or are a single-member LLC, you are eligible.
I am an Independent contractor, freelance, gig or self-employed worker. Can I apply for a PPP or EIDL loan and/or unemployment?
No. You cannot apply for a PPP and/or EIDL loan and unemployment. You must choose which one is most advantageous based on your current situation.
Can I file a jobless claim if I work for myself or in the gig economy?
Yes. Independent contractors, freelancers and gig workers will be able to get benefits through a new pandemic assistance program established by the CARES act. However, many states – including Illinois, are waiting on Department of Labor guidance before accepting applications for this expanded group served under CARES.
Is there a waiting period before you can apply for or receive benefits?
Previously some states made people wait a week before applying for benefits, but the federal relief bill encourages states to waive that waiting period, and many states have done so because of the pandemic. But don’t expect to immediately get a check.
Before the current crisis, it could take two to three weeks for your first check to arrive. Inadequate staffing and computer systems may also slow down the acceptance of claims. But help is on the way. The federal government has designated $1 billion to go towards beefing up staff to process claims, and many states are asking employers to let them know up front when they have laid off employees, speeding up the process.
Do you have to check in regularly to continue getting benefits?
Normally those receiving benefits would have to check in with their state agency every week to let administrators know they remain out of work as well as what job searches they’ve done. Now the job search requirement is generally being waived. But you may still need to go online weekly to confirm you’re still unemployed.
How long will the COVID-19 related federal program last?
It will be in place from Jan. 27, 2020, through Dec. 31, 2020. The extra $600 weekly benefit, however, will stop at the end of July.
I live in one state but work in another. Where do I file my jobless claim?
“You should apply where you work, not where you live,” says Evermore, adding that your company is paying taxes in the state where you do your job, and those officials will have all your relevant information on file.
If I have two jobs, and I lose one, can I apply for unemployment?
Yes. You would be eligible for partial unemployment insurance. The formula for figuring out how much aid you can get varies by state, but you should be able to receive some financial assistance.
What if my workplace temporarily shuts down because of COVID-19 and I can’t go work?
Federal officials are giving states leeway because of the pandemic, so yes, your state could give you unemployment insurance benefits if your job site shuts down due to the virus.
What if I still have a job, but I can’t work because I’m quarantined?
Because of COVID-19, your state can choose to provide you with financial assistance while you are off work.
What if I leave my job because of a risk of exposure to the virus, or to take care of a relative who’s been infected?
It’s up to your state, but yes, you could receive unemployment benefits for each of those scenarios.
If my child’s school or daycare center is closed and I can’t go to work, can I get unemployment?
Yes. You can get federal aid, even if your state doesn’t provide it.
What if I work part-time and lose my job because of the virus? Can I get benefits?
It depends on the state and it’s not clear how the federal relief act may impact those rules.
My workplace shut before I could start my new job, or I was laid off soon after I started. Do I qualify for unemployment?
Yes. You can get benefits in either case.
I’m currently getting unemployment. Can I get more assistance?
Yes. All recipients will receive the extra $600 a week.
I’ve exhausted my benefits. What now?
You can reapply and you should be able to receive the additional 13 weeks of payments provided by the federal government and the $600 in additional weekly pay.
Is unemployment retroactive?
The pandemic aid program dates back to January 27, so those who lost jobs for COVID-19 related reasons should get a benefit starting from when they became unemployed.
Are unemployment checks taxed?
Yes. If you receive those benefits, next year you should get a 1099G form to report that income.
If I’m being furloughed vs. laid off, can I file for unemployment?
“As long as your employer tells you can’t come to work and they’re not going to pay you … (you’re) unemployed for the purposes of collecting unemployment,’’ says Evermore.
What’s the difference between being furloughed and laid off?
Furloughed workers remain on the payroll, but must take some time off without pay. Workers who are laid off are removed from a company’s payroll, though they may be rehired at some point in the future
During the time I’m furloughed, will my contributions to my 401(k) or health savings account continue?
No. Employees approve deductions for each pay period, and “because there’s not a paycheck, there wouldn’t be a contribution,” says Amber Clayton, knowledge center director for the Society for Human Resource Management.
There also won’t automatically be catch up deductions when you return to work. For instance, if you contribute 3% of your pay per check to your 401(k) and are furloughed for two weeks, your first check back will be minus 3%. The deduction will not be doubled.
But you can increase your contribution if you want to make up for the time you missed.
What about health insurance? Will I still be covered while on furlough?
It depends on your employer and insurance coverage.
If there’s language in (the employee benefit plan) that allows for continuation of health coverage during short periods of leave, the employer could continue the personal health care coverage.
It would be up to your company to spell out whether premium payments missed while you were not receiving a check would be deducted once you return to work, or if you would have to make that payment before you take off. The company might also help cover your payment.
If your employer is not going to continue covering your health insurance during your furlough period, you should be able to pay for your company health plan on your own through COBRA (Consolidated Omnibus Budget Reconciliation Act). But such coverage can be very expensive.
For those living in the ten most populous states, below are links to unemployment benefit resources:
New York: https://labor.ny.gov/unemploymentassistance.shtm
North Carolina: https://des.nc.gov/apply-unemployment/
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