Unemployment Compensation Under the CARES Act

March 27, 2020 Advisory

As part of the CARES Act, Congress broadly expanded unemployment compensation and allocated federal funds to support state-based short-time (also sometimes known as “work sharing”) compensation programs.

The CARES Act offers broad and comprehensive unemployment compensation above and beyond that provided under state unemployment compensation laws. Subject to agreements entered into between states and the federal government, generally, individuals who are unemployed, partially employed or unable to work due to COVID-19 will be eligible to receive $600 per week in federal assistance, in addition to the weekly compensation calculated under state unemployment compensation laws. However, these programs do not benefit those who can work from home with pay or who are receiving sick leave or paid leave benefits.

Even individuals who have maxed out their use of state and federal unemployment compensation benefits, are not currently receiving any compensation, and are able and available to work and actively seeking work, are eligible for the program, which provides an additional 13 weeks of unemployment benefits (beyond what they would have otherwise been entitled to under state and federal laws). The additional 13 weeks include both the state-calculated amount of compensation plus $600 in federal funds.

Note that, for self-employed individuals, the weekly benefit amount is calculated according to standard federal disaster unemployment benefit guidelines, in addition to the $600 Federal Pandemic Unemployment Compensation.

Short-Time Compensation Programs and Grants

Under the CARES Act, states are eligible to receive funding from the federal government for short-time compensation programs and associated grants.

Short-time compensation plans are special agreements between a state government and an employer, whereby the employer reduces employee work hours by greater than 10% to avoid layoffs and splits with the state government half of the cost incurred. The short-time compensation program must be eligible under IRC 3306(v). Most states have similar, more limited versions of such programs and refer to them as “work sharing” programs. Although the program under the statute is administered by the state, the federal government will reimburse 100% of the state’s cost of running the program.

What is the ultimate impact of the CARES Act?

The CARES Act was drafted to increase drastically the scope of unemployment compensation in this time of crisis. Employees who are laid off or have their compensation drastically reduced below state maximum benefits levels are likely to fit a category eligible for benefits. As of the writing of this article, the House Ways and Means Committee had published the following information: Provisions Related to Unemployment Compensation in the Senate-passed CARES Act.

Contact Us
  • Worldwide
  • Boston, MA
  • Chicago, IL
  • Denver, CO
  • Dublin, Ireland
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • London, England
  • Miami, FL
  • New York, NY
  • Orange County, CA
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
  • Washington, D.C.
  • Wilmington, DE
abstract image of world map
Boston, MA
800 Boylston St.
30th Floor
Boston, MA 02199
Google Maps
Boston, Massachusetts
Chicago, IL
100 North Riverside Plaza
Suite 1500
Chicago, IL 60606-1520
Google Maps
Chicago, Illinois
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Dublin, Ireland
Fitzwilliam Hall, Fitzwilliam Place
Dublin 2, Ireland
Google Maps
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Edwardsville, Illinois
Jefferson City, MO
101 E. High St.
First Floor
Jefferson City, MO 65101
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
7160 Rafael Rivera Way
Suite 320
Las Vegas, NV 89113
Google Maps
Las Vegas, Nevada
London, England
Royal College of Surgeons of England
38-43 Lincoln’s Inn Fields
London, WC2A 3PE
Google Maps
Miami, FL
355 Alhambra Circle
Suite 1200
Coral Gables, FL 33134
Google Maps
Photo of Miami, Florida
New York, NY
7 Times Square, 44th Floor
New York, NY 10036
Google Maps
New York City skyline
Orange County, CA
19800 MacArthur Boulevard
Suite 300
Irvine, CA 92612
Google Maps
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
222 South Main St.
Suite 1830
Salt Lake City, UT 84101
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri
Washington, D.C.
1717 Pennsylvania Avenue NW
Suite 400
Washington, DC 20006
Google Maps
Photo of Washington, D.C. with the Capitol in the foreground and Washington Monument in the background.
Wilmington, DE
1007 North Market Street
Wilmington, DE 19801
Google Maps
Wilmington, Delaware