A woman walks wearing a mask to protect herself from the novel coronavirus (COVID-19) in front of a … [+]
AFP via Getty Images
As the coronavirus pandemic continues to shut down businesses, millions of workers who have lost their jobs or had their hours slashed—or fear such cutbacks—are scrambling to figure out how they’ll manage financially.
The $2 trillion stimulus package agreed on by negotiators for the White House and leaders of both parties in Congress in the early hours of Wednesday includes a big expansion of both the length and amount of unemployment insurance (UI) available. The deal even expands UI to cover gig workers, independent contractors and individuals who are self-employed.
If you can’t work or have had your hours cut because of COVID-19, here’s what you need to know now. We’ll update this post as more details of the stimulus and how it will be implemented become available.
Workers will be eligible for a $600 weekly boost on top of regular state unemployment benefits
The stimulus bill is giving a federally funded weekly pay boost to those who are unemployed.
In addition to regular state unemployment insurance, individuals will receive an additional $600 per week for up to four months. In total, unemployed workers will receive 39 weeks of unemployment benefits, which will carry them through to the end of 2020.
State unemployment benefits vary from state to state but averaged $385 a week nationwide in January. Adding the $600 boost included in the stimulus package would bring an average weekly unemployment check to $985, which exceeds the median weekly earnings of $936 in the fourth quarter. (Women had median weekly earnings of $843; men took home a median of $1,022.)
“Most will get their full salary, or very very close to it,” Senate Minority Leader Chuck Schumer, D-NY, said this morning on CNN.
The expanded unemployment insurance is designed to put money quickly and directly into laid-off people’s pockets, in the hopes that they will be able to keep paying their bills and feeding their families and be able to come through the pandemic relatively intact, financially.
Gig workers, freelancers, self-employed are eligible
In an unprecedented move, the stimulus bill expands unemployment protections to gig workers, freelancers and self-employed individuals, who typically don’t qualify for unemployment benefits.
Seth Harris, former Deputy U.S. Secretary of Labor, describes this aspect of the stimulus package as a “gigantic change,” but notes that it could be complicated to execute.
“It will be harder [to calculate] because these workers don’t have a W-2 or an average weekly wage,” Harris says. “These folks have income that varies dramatically from week to week or month to month.”
It’s not clear yet how state benefits will be calculated for these workers; unemployment is traditionally calculated as a percentage of weekly earnings, up to a maximum amount.
Workers can get company benefits and UI
Workers who are furloughed—but not actually laid off—will be eligible for unemployment benefits, Schumer noted.
That means they could stay on their company benefits plans and keep their company health insurance, while still being eligible for UI weekly benefits, which are paid through the states.
Generous sick pay and family leave might be available first
Even if you’re not “sick” and don’t normally get sick pay at work, you might qualify for paid sick or family leave for two to 12 weeks under the Families First Coronavirus Response Act that President Trump signed into law on March 18. The law covers employees of businesses with fewer than 500 employees, which will be fully reimbursed by the federal government within three months through 100% tax credits. (According to the IRS, those credits can first be claimed against payroll taxes due, with any excess owed paid as a refundable credit.)
Significantly, self-employed and gig workers who are paid as independent contractors are also eligible for equivalent tax credits if they are unable to perform services in their trade or business under similar circumstances related to coronavirus.
There are two sets of benefits, one for sick leave and one for family leave.
Sick leave: Under the law, employees can get 80 hours of sick leave (with part-time workers getting a proportionate share) at full pay, capped at $511 per day, or an aggregate $5,110 per worker, if they are unable to work or telework because they are under medical quarantine or medical treatment for COVID-19, suspect they have COVID-19, or are ordered to quarantine at home by the government. That’s even more than the new unemployment benefits and is the benefit to use if you haven’t been laid off or furloughed—but are not working because you’re sick.
Under the same law, if you are staying home to care for someone else who has COVID-19, or is suspected of having it, or for a child whose school or day care is closed, the two weeks of sick pay is a rate of two thirds of pay and capped at $200 a day or an aggregate $2,000 per worker. On average, that’s about what you will get from unemployment, although in individual cases it could be more or less, depending on your state unemployment system and your normal salary.
Family leave: Those covered by the act can get up to 12 weeks of family leave (with the first two weeks unpaid) if they must stay home with children whose schools and day care centers have closed because of the pandemic. When the pay kicks in, it’s at a rate of two thirds of pay, with a maximum payment of $200 per day, or an aggregate $10,000 per worker, In other words, it’s a maximum of $1,000 per week. Again, whether you should use this benefit or claim unemployment will depend on your circumstances.
While businesses with fewer than 50 employees also are covered, they may get exemptions if the provision causes too much hardship. Most businesses with more than 500 employees, which successfully pushed for exemption from the new law, already offer paid sick leave. Paid family leave is less widespread.
States were already relaxing unemployment insurance eligibility
Receiving unemployment assistance usually requires individuals to be involuntarily laid off from work, able to work, available to work and to be actively seeking work. But in a time where government officials are requiring people to shelter in place, and businesses are shutting down, these requirements make no sense.
The new stimulus bill marks a big change in eligibility rules. But even before it passes, states, encouraged by the federal Department of Labor (DOL), had started relaxing rules.
For example, DOL said states can pay benefits if a closing relating to COVID-19 prevents employees from working or if a worker is quarantined. Federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19, the DOL noted. In addition, a March 12 DOL letter to the states reminded them they were free to waive a seven day waiting period for benefits that many of them now impose.
The states had started moving. New York, for example, waived its usual seven-day waiting period on applications from people who are out of work due to coronavirus closures or quarantines. To understand the requirements of eligibility for unemployment in your state, visit your state’s unemployment insurance website. You can find links to your state at this DOL site. Remember, however, that the information on your state’s site likely won’t yet reflect the stimulus changes, since the bill has yet to become law and even the states don’t know all the details.
You might be able to apply if you’re technically still employed but have had your hours cut
The DOL March 12 guidance to states makes it clear that workers whose hours have been reduced significantly, but are technically still employed, can be eligible for partial unemployment insurance. Again, this is currently at the option of the states and for information about rules in your state, contact your state’s unemployment insurance program.
Unemployment application systems are overwhelmed—but keep trying
Unemployment centers are staffed according to last year’s unemployment rate, which was at record lows. This means there’s a shortage of staff available to help process the sudden uptick in applications, and the websites are easily overwhelmed.
To put it into perspective for you, consider this: The Economic Policy Institute estimates 3.4 million unemployment insurance claims were filed last week (an official number will be released tomorrow). Over the last 53 years, the highest ever number of unemployment claims were 700,000 in one week, during the Reagan administration, Harris says.
Put simply, unemployment offices are overwhelmed. Websites for unemployment insurance in Oregon, Washington, D.C. and New York have experienced crashes due to the high volume of web traffic. Some states are now staggering the days on which people can apply for unemployment benefits.
“Unemployment offices are chronically underfunded, under resourced, lacking in technologies and really swamped as it is—they all of a sudden were hit with the largest unemployment tsunami ever,” Harris says. “It’s not the least bit surprising that they’re scrambling to try and keep up. But they’ll get to everybody and they’re responding. Folks need to keep persisting.”