Since the COVID-19 shut down began, an enormous number of creative businesses and organizations have had to close or severely reduce capacity, sending many workers home with lay-offs and furloughs.
This article takes a look at unemployment insurance and the Employment Security Department programs to help employers weather the financial impacts of COVID-19. If you are the owner or manager of a business with employees, then this article is for you.
In this article, please find the following topics:
- What is Unemployment Insurance?
- How does the CARES Act federal stimulus affect Unemployment?
- Regarding Quarterly Filings
- Temporary or Partial Shutdowns
- Paid leave, health insurance and unemployment
- Paying claimants while they’re getting unemployment benefits
- Permanent business closures
- Requesting relief of benefit charges
- Reimbursable employers
This article contains these topics:
You may also consider reviewing our other articles regarding unemployment insurance to understand the system and what your employees’ experiences will be to apply and maintain benefits.
For more information about Unemployment Insurance Benefits, please see these other articles:
- Unemployment Insurance & Benefits: an overview
- Applying for regular unemployment benefits (employees)
- Unemployment benefits for contractors, freelancers and other self-employed workers (PUA)
This article is a part of the Financial Survival Handbook [link forthcoming], which is one section of the COVID-19 HANDBOOKS FOR THE CREATIVE SECTOR. All this month, we will post new daily articles on Financial Survival and other refreshed articles from the Handbook.
What is Unemployment Insurance?
The combined federal and states UI system helps people who have lost their jobs by temporarily replacing part of their wages while they look for work. Created in 1935, it is a form of social insurance in which taxes collected from employers are paid into the system on behalf of working people to provide them with income support if they lose their jobs. The system also helps sustain consumer demand during economic downturns by providing a continuing stream of dollars for families to spend.
The basic unemployment insurance program is run by the states, although the US Department of Labor oversees the system. In most states, it provides up to 26 weeks of benefits to unemployed workers, replacing about half of their previous wages, on average. States provide most of the funding and pay for the actual benefits provided to workers; the federal government pays only the administrative costs. Although states are subject to a few federal requirements, they are generally able to set their own eligibility criteria and benefit levels.
During pre-COVID times, the UI Extended Benefits (EB) program typically provided an additional 13 or 20 weeks of compensation to jobless workers who have exhausted their regular benefits in states where the unemployment situation has worsened dramatically. And during recessions, the federal government has historically created temporary, wholly federally-funded programs providing further weeks of benefits, much like the CARES Act did earlier in 2020.
For more information about the nature, practice and triggering events for UI EB during economic downturns, check out this article by the Brookings Institute.
How does the CARES Act federal stimulus affect Unemployment?
Federal stimulus in the recently enacted CARES Act creates Pandemic Unemployment Assistance (PUA) for businesses and workers affected by COVID-19. This assistance is expected to be extended and expanded with the Heroes Act, currently under consideration by Congress.
The CARES Act:
- Federal funding of benefit payments: Your unemployment tax rate won’t go up because your employees are using funds from the CARES Act. The same is true if you are using Shared Work
- Relief for reimbursable employers: Half of the bill from employees using standard unemployment benefits will be reimbursed by the federal government for non-profits, governments, and other employers who have elected to be reimbursable.
- Benefits for self-employed workers: The bill supports benefits for self-employed workers such as freelancers and independent contractors who’ve lost business to receive benefits under the Pandemic Unemployment Assistance (PUA) program.
Regarding Quarterly Filings
No matter what the status of your business, it is more important than ever before that you get your reports filed early or on time. An unprecedented number of Washingtonians are applying for unemployment and your reports are crucial to finding out if they can establish a claim. Quarterly tax reports are due.
However, Washington’s Employee Security Department is making adjustments anyway to account for the crisis, including more leniency on filing deadlines. Emergency rules offer more leniency for meeting UI deadlines. If you have a COVID-19 related delay, you can request a penalty waiver in writing.
ESD really wants to emphasize the importance of filing on time if you can. Late reports and responses impact benefit claims.
Temporary or Partial Shutdowns
If a business must shut down temporarily or in part due to COVID-19, they may be eligible for a relief of unemployment charges, and may consider the SharedWork program or Standby status for their employees.
COVID-19 Health- and Safety- Related Temporary Shutdowns
If an employer temporarily shuts down their business due to health and safety considerations (possible COVID contamination or quarantine at the worksite), they may be eligible for a relief of benefit charges.
Taxable employers: Send ESD a written request for relief of benefit charges. You can submit your relief of charges online using eServices. In the Client Account view, select the Issues tab then the “Relief of charges” link. The fax number is 800-301-1796, and the mailing address is the following:
Employment Security Department
Registration and Rates Unit
PO Box 9046|
Olympia, WA 98507-90462
Reimbursable employers: If you reduced hours or shut down to follow public health recommendations, the federal government will pay 50 percent of their benefit charges. More instructions below.. [LINK]
Other Slowdown & Shutdown Lay-offs
Businesses may also be eligible for a relief of benefit charges for temporary employee lay-offs due to a slowdown of business. Employers who put their employees on standby have had an opportunity for some relief until recently and may again after the next stimulus.
In the original CARES Act, the legislature approved $25 million for employers who apply for relief by 9/30/2020. This money has been used to buy down some benefit charges incurred while employees were on standby, and an extension is likely with the forthcoming Heroes Act.
Defining temporary layoffs and furloughs
Temporary layoffs are when employers let employees go due to reductions in force. Employers do not have to rehire those employees.
Furloughs are a form of temporary layoff that may consist of a complete stoppage of work or reduced work hours for a specific period. For example, a reduction of one day a week for a year.
- Unemployment benefits are determined on a weekly basis.
- Full-time workers whose hours of work are reduced by one workday each week usually aren’t eligible for partial unemployment.
- This is usually because they earn too much in the week to be eligible.
Work search requirements for employees on standby or otherwise receiving benefits
Do my employees have to look for other work to get unemployment benefits?
During the Governor’s “Stay Home, Stay Healthy” order, those receiving unemployment benefits do not need to fulfill the usual requirement to search for work during their claim period. That means while ESD encourages workers to look for work, it is not required.
Also during the order, claimants will automatically be placed on standby, so that your laid-off or furloughed employees will not be required to look for work.
ESD doesn’t know yet how long this requirement will be waived, though it has been extended at least until the end of 2020 and will likely extend further. When the waiver is gone, you could request to place your employees on standby for up to 12 weeks after that point.
Unemployment benefits for business owners
Many business owners are eligible for unemployment benefits, but certainly not all.
Owners need to have previously elected to be covered for unemployment and paid unemployment taxes to be eligible. Under the corporate officer rules, LLCs are not covered.
But, the best way to find out is to apply.
Can employees of non-profits get unemployment benefits?
Most non-profit employees are eligible for unemployment benefits. But some might be exempt. The best thing they can do is apply for benefits to find out.
Non-Profit employers who have questions about unemployment can contact our Accounts Management Center via email email@example.com or phone 855-829-9243.
SharedWork is a voluntary business sustainability program that provides flexibility to retain employees at reduced hours. Washington’s SharedWork program helps businesses and employers avoid layoffs by paying employees partial unemployment benefits when their work hours are reduced.
For claimants to be on SharedWork, their employers must apply to participate in the SharedWork program. It allows employers to reduce hours by as much as 50 percent, while their employees collect partial benefits to replace a portion of their lost wages. We use the SharedWork chart to deduct their earnings from their weekly benefits.
- Employers must apply to participate in the program.
- SharedWork is for employees who are both:
- Permanent; and
- Paid hourly or who can calculate their salaries as an hourly wage.
- Claimants on SharedWork do not have to look for other work.
- They must be available for all work offered by their regular employer.
- Employers must continue to pay for employees’ health insurance.
- SharedWork plans last one year and have a maximum benefits payable amount.
- Employees who work fewer hours may run out of benefits more quickly.
- SharedWork participants may be eligible for benefit extensions.
Standby is a way for your employees to collect unemployment benefits without having to look for other work. Standby is available for employees who have been laid off or had their hours reduced, and for those who have a probable return to work date.
- Available for full and part-time employees. (See emergency rules).
- While on standby, workers must accept any work you offer that they can do without breaking isolation or quarantine.
- Emergency rules have increased the maximum amount of time for standby.
- It’s now available for up to 12 weeks.
During the Governor’s “Stay Home, Stay Healthy” order, all claimants are automatically placed on standby. There is nothing the employer must do for the first 12 weeks.
Beyond 12 weeks, employers may request an extension of standby for their employees. The request must come from the employer, and will not be necessary until the “Stay Home, Stay Healthy” order and the related waiver on work search requirements has finally expired. Weeks of standby during the Governor’s “Stay Home, Stay Healthy” order do not count toward the 12 weeks of regular standby.
Standby employees and permanent closures
If a business does not plan to reopen, employees will remain on standby until the end of the year (or whenever the waiver on work search is lifted) but will be removed at that time. Employers should contact ESD if they don’t plan to reopen. Once the Governor’s “Stay Home, Stay Healthy” order ends, standby will only be available if employees are returning to work.
This describes employees who continue to work at least 40 percent of their regular full-time hours each week.
- When they apply for benefits, they should choose “currently working reduced hours (partially employed).”
- They must report any hours and earnings for each week they claim benefits.
- ESD uses this standard chart to deduct their earnings from their weekly benefits.
To be considered partially employed, all of the following must apply. Your employees:
- Were originally hired as full-time employees.
- Work at least 40 percent of their regular full-time hours during the period of reduction (16 hours).
- Expect to return to their employer full-time within four months.
If partially employed claimants file a weekly claim and report less than 16 hours, they typically need to search for work, but that requirement is suspended temporarily.
Paid leave, health insurance and unemployment
How does the Families First Coronavirus Response Act (FFCRA) affect Paid Sick Leave (PSL)?
Effective 4/1/20 through 12/31/20, FFCRA provides up to two weeks of payment for employees who qualify. PSL is not available for layoffs due to lack of work. It is designed for employees who are unable to work for COVID-19 related reasons, like the Governor’s order to stay at home. If you can’t offer your employees work due to a lack of business, they can’t get PSL.
- As of 3/31/20, claimants cannot receive PSL and unemployment benefits in the same week.
- Sign up for regular email updates about our COVID-19 response.
- Full time employees can receive up to 80 hours of PSL.
- To calculate available PSL for part-time employees, visit U.S. Department of Labor’s website.
- PSL is not retroactive.
Paying for employees’ health insurance while they’re laid off
ESD allows for coverage of health insurance for laid off employees without affecting their unemployment benefits.
If you wish to continue to pay for your employees’ health insurance, that would not affect their ability to receive benefits. Please go to the state Office of the Insurance Commissioner (OIC) website for more information, or contact your insurance carrier for more info about who is eligible to participate in your health plan.
Other considerations for unemployment benefits and paid leave
- Workers can use accrued paid sick leave for any physical illnesses, injuries, or other health conditions. They can also use accrued paid sick leave to care for family members who have physical illnesses, injuries, or other health conditions.Check out these FAQs from Labor & Industries for more info.
- Employees can’t receive unemployment benefits and paid sick leave at the same time.
- All paid time off count as earnings, but employees may still be eligible for a partial benefit after or along with vacation, sick or other leave.
- Employees are not required to use all their paid leave before applying for unemployment during a temporary shutdown. If employees cash out their accrued leave, they should not report it because it can’t be deducted from their weekly benefit.
Paying claimants while they’re getting unemployment benefits
Oftentimes, unemployment benefits fall short of salaries and some folks want to try to make up the difference. Paying supplemental income to employees is possible but not recommended.
Claimants file for benefits weekly and must report any payment they receive from their employer(s). That includes sick leave, paid time off, vacation, and other supplemental payments. Those payments are deducted from claimants’ weekly benefit amount. See the standard UI or the SharedWork deduction charts.
In the case of severance pay, you should pay severance to your employees before they file their claim and it doesn’t apply to any weeks they file for benefits, it will not affect their unemployment benefits.
Federal stimulus checks will not be deducted from weekly benefit amounts. These checks don’t come from an employer, so they’re not reportable wages.
Permanent Business Closures
If you lay off employees due to a permanent closure, they can apply for unemployment benefits. We determine eligibility on a case-by-case basis. Layoff assistance may be available for businesses facing major layoffs. Learn more.
Requesting Relief of Benefit Charges
If you would like to request a relief of benefit charges, you must send a written request. You can send it online or via fax or mail.
- Online via eServices
- Fax: 800-301-1796
- Mail: ESD—Experience Rating/Benefit Charging Unit ; PO Box 9046; Olympia, WA 98507-9046
ESD needs to get your request no later than 30 days after they first mailed your Benefit Charging Notice.
ESD is offering some leniency for requests received after the 30-day period.
- Employers must establish good cause for not sending their request on time.
- Through emergency rules, they’ve added to the list of reasons that qualify as good cause.
- Good cause now includes delays due to COVID-19.
Most employers pay into the unemployment insurance system with each paycheck and for each employee. However, certain entities (usually nonprofit organizations) operate on a “reimbursement” system, where they keep their own accounting of unemployment and pay unemployment payments to the ESD system on a per-event basis.
This is a common system offered in most states throughout the country. Unfortunately, most organizations have not planned on a full termination or furlough of their staff and are experience financial hardship otherwise anyways. Since, as nonprofits, many of these entities are also critical social and.or cultural services, including many performing and visual arts organizations.
In pre-COVID times, these reimbursable employers were required to pay 100% of benefit charges. During the national emergency period, the federal government is offering some relief to reimbursable employers.
- If they reduced hours or shut down to follow public health recommendations, the federal government will pay 50 percent of their benefit charges.
Workers at these organizations are eligible for the Federal Pandemic Unemployment Compensation supplement of $600 a week.
- What is a reimbursable employer for the purposes of unemployment insurance?
- Some nonprofit organizations, states and political subdivisions of the state, and Indian tribes may qualify as reimbursable employers which reimburse the Employment Security Department for unemployment benefits actually paid to separated employees instead of paying unemployment taxes.
- How are reimbursable employers billed for unemployment benefits paid to their employees?
- Reimbursable employers are billed the quarter after unemployment benefits are paid. Accordingly, benefits paid January through March were billed to reimbursable employers in April and are due by May 31.
- How does the CARES Act provide temporary relief to reimbursable employers?
- The CARES Act provides payment to states to relieve reimbursable employers of 50 percent of the costs they incur through December 31, 2020 to pay unemployment benefits.
- How is the CARES Act provision providing 50 percent reimbursement for unemployment benefit charges to reimbursable employers being implemented?
- Per U.S. Department of Labor guidance, the Employment Security Department must receive payment for 100 percent of the benefit charges owed by a reimbursable employer to then receive the 50 percent reimbursement from the U.S. Department of Labor to then provide the employer.
- How does the HEROES Act passed by the U.S. House of Representatives improve implementation of the 50 percent reimbursement?
- The HEROES Act provides flexibility to States so that reimbursable employers do not have to pay the full cost of benefits upfront to then receive relief. The Act also extends the temporary federal relief for 50 percent of the unemployment costs for reimbursing employers to January 31, 2021.
- What can reimbursable employers do now to seek relief for unemployment benefit charges if they are unable to make a full payment to the Employment Security Department?
- To explore potential repayment plans, reimbursable employers who are unable to pay their bills in full should contact the Employment Security Department via email at ESCTAX@ESD.WA.GOV.