Unemployment Insurance Funding Included in COVID-19 Law

Emergency Funding to Help Stabilize Unemployment Insurance

On Wednesday, March 18, Congress approved and the President signed into law the Families First Coronavirus Response Act, H.R. 6201. This bill is the second in a series of packages expected to be enacted in response to coronavirus (COVID-19).

The Families First Coronavirus Response Act includes a number of provisions aimed at stabilizing and ensuring access to unemployment insurance. This includes $1 billion in 2020 for immediate additional funding and emergency grants to states for the administration of unemployment insurance.

As outlined by the Democratic staff of the House Ways & Means Committee, the bill includes the following:

• Emergency Transfers for Unemployment Compensation Administration. Provides $1 billion in 2020 for emergency grants to states for activities related to processing and paying unemployment insurance (UI) benefits, under certain conditions.
• $500 million would be used to provide immediate additional funding to all states for staffing, technology, systems and other administrative costs, as long as they meet basic requirements about ensuring access to earned benefits for eligible workers.

Those requirements are: 

• Require employers to provide notification of potential UI eligibility to laid-off workers
• Ensure that workers have at least two ways (for example, online and phone) to apply for benefits
• Notify applicants when they receive an application and it is being processed
• If the application cannot be processed, provide information to the applicant about how to ensure successful processing

The funding would be distributed in the same proportions as regular UI administrative funding provided through annual appropriations.

The remaining $500 million would be reserved for emergency grants to states which experienced at least a 10 percent increase in unemployment. Those states would be eligible to receive an additional grant, in the same amount as the initial grant, to assist with costs related to the unemployment spike. It would also be required to take steps to temporarily ease eligibility requirements that might be limiting access to UI during the COVID-19 outbreak. This would include work search requirements, required waiting periods, and requirements to increase employer UI taxes if they have high layoff rates. Depending on the state, those actions might require changes in state law or might just require changes in state policy.

This also provides temporary federal flexibility regarding those UI restrictions, which are also in federal law:

• Temporary Assistance for States with Advances. Provides states with access to interest-free loans to help pay regular UI benefits through December 31, 2020, if needed.
• Technical Assistance and Guidance for Short-Time Compensation Programs. Requires the Secretary of Labor to provide technical assistance to states that want to set up work-sharing programs. Employers reduce hours instead of laying employees off, and then employees receive partial unemployment benefits to offset the wage loss.
• Full Federal Funding of Extended Unemployment Compensation for a Limited Period. This is for states that experience an increase of 10 percent or more in their unemployment rate (over the previous year). States will also need to comply with all the beneficiary access provisions in section 102. This provides 100 percent federal funding for Extended Benefits, which normally require 50 percent of funding to come from states. When a state has high unemployment, extended benefits are triggered. It will provide up to an additional 26 weeks after regular UI benefits (usually 26 weeks) are exhausted.

Equifax will continue to monitor and review any new information released by the states.  If you are an Unemployment Cost Management client, rest assured we are prepared to scale to meet changes in unemployment claim processes or volume over the coming weeks and will continue to help meet your needs.