CARES Act: Enhanced Unemployment Benefits, Self-Employed Now Qualify

08 Apr 2020 CARES Act: Enhanced Unemployment Benefits, Self-Employed Now Qualify

The Coronavirus Aid, Relief, and Economic Security (CARES) Act enhanced standard Unemployment Benefits for those affected by COVID-19. It also created Unemployment opportunities for many who were traditionally not be eligible. The Act increased amounts of available benefits, extended the time during which benefits are paid and expanded the definition of workers eligible to receive benefits, including the self-employed.

Unemployment Benefits Overview

Unemployment Compensation also referred to as Unemployment insurance or unemployment benefits, is a type of state-provided insurance that pays specified amounts when someone loses their job and meet certain eligibility requirements. Unemployment benefits are generally not available to those who quit their job, are self-employed, or fired for cause. The benefits are primarily paid out by state governments based on a person’s prior income levels and funded by FUTA and SUTA taxes paid by employers. Unemployment insurance provides cash payments to unemployed workers who are actively seeking employment.

CARES Act Changes

First, the CARES Act created Federal Pandemic Unemployment Compensation (FPUC). This provision increased the amount of weekly benefits available to eligible persons. In addition to normal state allowed amounts, the FPUC provision increases the amount of weekly benefits by an additional $600 per week. The additional payments are only available for eligible weeks between April 25, 2020 (or when the state elects to offer the additional payments, if later) and July 31, 2020.

Second, the CARES Act also created Pandemic Unemployment Emergency Compensation (PUEC).  State offered benefits generally cover 26 weeks of Unemployment benefits. This provision provides up to 13 additional weeks of federally financed unemployment benefits through December 31, 2020 for those who have exhausted state offered benefits. If any of these 13 weeks fall between the April 25^th through July 31^st dates above will receive the additional $600 under the FPUC provisions.  Any individual already receiving Unemployment benefits, becomes eligible or is eligible under the new Pandemic Unemployment Assistance discussed next, will be eligible for the additional 13 weeks during the eligibility period.

Self-Employed and Independent Contractors Now Qualify

Section 1202 of the CARES Act also created Pandemic Unemployment Assistance (PUC), extending benefits to those traditionally not eligible. PUA permits eligible COVID-19 affected individuals who are self-employed, independent contractors, gig workers and certain others to receive benefits they otherwise would not be eligible for. These benefits are paid through state employment departments. To apply, contact the agency in your state.

Qualifications: To qualify for these expanded unemployment benefits, an individual will have to self-certify that they were available to work but unable to for any of the following reasons:

• Has been diagnosed with COVID-19 or are experiencing symptoms of COVID-19 and is seeking medical diagnosis
• A member of the individual’s household has been diagnosed with COVID-19
• The individual is providing care for a family member or member of their household who has been diagnosed with COVID-19
• The individual is the primary caregiver for a child or other person in the household who is unable to attend school or another facility as a direct result of COVID-19
• The individual is unable to work because of a COVID-19 imposed quarantine.
• The individual is unable to work as the result of being advised to self-quarantine by a health care provider
• The individual was scheduled to start a job, but was unable to do so as a result of the COVID-19 health emergency
• The individual has become a major supporter of a household as the result of the death of the head of household who has died as a direct result of COVID-19
• The individual quit their job as a direct result of COVID-19
• The individual’s place of employment is closed as a direct result of COVID-19.
• Additional eligibility qualifications may be added by the Secretary of Labor.

If an individual is self-employed, seeking part time employment, does not have sufficient work history or otherwise would not qualify for regular unemployment or extended benefits under state or Federal law or pandemic emergency unemployment compensation and meet the requirements above they are eligible for benefits.

Additionally, in states that have short-time compensation (STC) programs, some individuals may be eligible for partial Unemployment benefits. Under the CARES Act, states with existing STC programs can receive 100% of the Unemployment compensation paid under existing state STC programs through December 31, 2020 and incentivizes states that do not offer the programs to implement them.

Though the Federal government created these enhancements, they are administered by the states. Application is with state Unemployment offices.  As of now there is not much guidance as to what documentation will be needed by the self-employed and those that traditionally not eligible for benefits. Each state will likely create their own requirement. To apply, contact the agency in your state.

Please share this information with anyone who may benefit. Don’t forget to visit our COVID-19 resource page for more business and tax updates. We are here to serve you during this difficult time. Our virtual offices are open! Contact Us.