Coronavirus: Who all are eligible for unemployment insurance?

The U.S. Labor Department last week reported that a record 3.28 million Americans filed unemployment claims in the previous week. These numbers are expected to surge drastically as the  coronavirus outbreak continues to affect the global economy. To help the workers who have lost their jobs due to the outbreak, the CARES Act (Coronavirus Aid, Relief, and Economic Security) increases the amount of unemployment insurance. However, not all are eligible for unemployment insurance. Thus, to benefit from the CARES Act, you should know if you are eligible for unemployment insurance or not.

Who are eligible for unemployment insurance?

The unemployment benefits will be available to all the workers who became unemployed of no fault of their own. For instance, the workers who have been fired for misconduct or any other reason are not eligible.

However, each state, district and territory has come up with their own guidelines on the eligibility requirements and the benefits. One requirement is the time worked during a set period, also called the base period. Usually, it is the first four out of the last five completed calendar quarters, as per the U.S. Department of Labor.

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Moreover, if you got a severance package from your employer, such as a lump-sum payment, then it is important that you check with your state’s labor department whether or not you are eligible for unemployment insurance.

California does not disqualify workers if they got severance pay, be it in the form of a lump sum or regular installments. Texas, on the other hand, does disqualify those who received severance pay (most types of severance pay).

The amount of benefit is usually between 40% and 60% of the person’s recent earnings. These benefits are paid weekly for about 12 to 28 weeks, and vary from state to state.

More workers are eligible

The CARES Act not only provides additional funds for unemployment insurance, but also introduces a new program, called Pandemic Unemployment Assistance (PUA). This program expands the unemployment benefits to the workers who were not eligible earlier.

This way, it would benefit about 16 million Americans who are freelancers, self-employed, independent contractors, farmers and gig workers. Also, the self-employed workers with a limited liability company (LLC) or S corporation qualify for the program.

This will be a welcome change for many gig workers, including those working as Uber and Lyft drivers. These workers fall under independent contractors, and thus were not eligible for benefits, such as paid leave and health care.

Now, these workers whose earnings have been reduced due to the coronavirus, would be eligible for unemployment insurance as well. Moreover, the benefits would be available to those looking for part-time work and also those without a sufficient work history.

People, however, need to prove that they are unemployed and are seeing reduced earnings due to the outbreak. The reasons that will count include, diagnosed with coronavirus, health authorities have asked to remain quarantined, taking care of someone diagnosed with coronavirus, taking care of a child who is unable to attend school, was scheduled to start a new job that is closed now, and more.

As to when the newly eligible workers can start filing for unemployment, it depends on the state. Even though the funds come via the CARES Act, states still need to approve the agreement and come up with new necessary infrastructure to handle the new unemployment claims.

Who are not eligible?

Even though the current unemployment insurance covers almost everyone, there are a few who are not covered. Those who are working from home and are paid normally, and those getting paid time off are not eligible for the unemployment insurance benefits under the CARES Act.

In case a teleworker is not able to work because he or she becomes ill, or is taking care of someone else who is sick due to the virus, then that person may be eligible. Also, workers who have used their PTO, but are still out of work, may become eligible for unemployment benefits.

Though the new program extends the benefits to the gig and self-employed workers, they may not qualify if they lack proper work and pay documentation. However, the type of documentation requirements will largely depend on the Labor Department guidance and its interpretation by the states.

“For [Pandemic Unemployment Assistance], they will accept lots of different kinds of records, but if you didn’t pay federal taxes, don’t have pay stubs, have records of what you were paid, you’re not going to be able to apply,” Stephen Wandner, a labor economist at the W.E. Upjohn Institute for Employment Research, said, according to CNBC.

Moreover, employees who derive a significant portion of their income through tips, such as waiters and bartenders, may benefit less from the program. The amount of unemployment checks they get would largely depend on whether or not their employer reports those tips as income.

Usually, tips are considered part of the income when calculating unemployment benefits. However, some employers under report the tip income. Even in worst case scenarios, such workers will qualify for the unemployment benefits, but their unemployment checks may be reduced.