COVID-19 Unemployment Compensation Updates

04/10/2020 / Alex Beeby

The unemployment compensation landscape is constantly evolving during this COVID-19 pandemic. The United States Department of Labor (“DOL”) and Minnesota’s Department of Employment and Economic Development (“DEED”) are frequently issuing new guidance and updates as they work to implement emergency orders and legislation and to try to respond to the mass layoffs stemming from COVID-19 shutdowns. While DEED’s unemployment website provides useful information, its call center is closed to customer service calls as the office focusses on processing the flood of applications and implementing the new policies. This article seeks to distill the current unemployment compensation landscape to address the most frequently asked questions we receive from employers considering layoffs and employees facing layoff.

Who is eligible for unemployment compensation?

Unemployment is typically available to any applicant who has lost at least 50% of their pay and is working less than 32 hours per week. Employers can also apply for a Shared Work Program that permits them to spread a reduction in hours over a group of employees, so that the employees only experience a 20% to 50% reduction in hours but remain eligible for unemployment compensation for those lost wages. Employees cannot count time for which they use PTO as lost hours or have the option to work remotely.

The state and federal government is expanding access to unemployment in response to the pandemic. Governor Walz issued an executive order granting DEED flexibility from strict compliance with unemployment statutes. DEED is encouraging everyone experiencing a reduction in pay or hours to apply. We are trying to confirm reports that DEED might be approving applicants experiencing less than a 50% reduction in hours outside of the Shared Work Program. Typically, unemployment is not available any week where earnings are more than the weekly compensation amount (50% of normal wages). The governor’s order also extends unemployment to individuals whose reason for reduced hours result from quarantine, caring for others, or other, similar COVID-19 related reasons. The CARES Act extends access to independent contractors, self-employed people, and others who are not usually eligible for unemployment. DEED is working to implement these changes and will provide updated information on its CARES Act page.

We are not hearing of many problems with people enrolling and receiving their benefits. However, some employees may have difficulty proving their eligibility if they recently started working or recently received an overpayment of unemployment benefits for a prior period of unemployment. Those employees should still complete applications and benefits requests, so they are eligible for these payments when the issues are resolved. Benefits are not paid for any periods prior to the date of application, so applications should be completed immediately.

How much do people receive on unemployment?

The standard unemployment compensation payments replaces 50% of the lost wages up to a statutory cap (currently $740 per week). The CARES Act provides an additional, separate payment of $600 per week. On April 8, Minnesota became one of the first states to begin issuing these payments. According to the DOL, anyone eligible to receive at least one dollar in unemployment compensation is should receive the $600 payment for that week. Governor Walz’s order removed the standard waiting period before applicants begin receiving benefits. The CARES Act extended the time period that some workers can receive unemployment benefits.

What are the financial implications for employers?

Governor Walz’s order waives most of the employer penalties for COVID-19-related unemployment claims. However, the CARES Act does tie some strings to the forgiveness of Payroll Protection Program loans on the degree to which employers return their workforce to pre-pandemic levels within a certain amount of time. See our article about the Payroll Protection Program for more information.

The CARES Act also provides some relief for employers, such as some non-profits, who “self-insure” or “reimburse” DEED for unemployment payments by covering 50% of this reimbursement. The Minnesota Council of Nonprofits is advocating for further relief, and DEED is still implementing these changes. We plan to provide further information in an upcoming article, but nonprofits and their employees are still eligible for all other benefits in this article.

Additional Resources

This is a continuously changing situation, with many new emergency orders and relief packages being proposed and enacted. Our COVID-19 Resource Center can be useful in understanding how these changes might affect your business. For more information about unemployment compensation, please see my prior, more comprehensive article about Unemployment Compensation and COVID-19.

Here are some additional resources you might find useful in this situation: