On December 21, 2020, Congress passed the Consolidated Appropriations Act of 2021 (CAA) which modifies or extends to March 14, 2021 many of the relief programs first created in March 2020 by the Coronavirus Aid, Relief and Economic Security Act (CARES Act), including three expanded unemployment insurance benefits programs (which we previously blogged about here) and a new benefit program for “mixed earners”. We provide here a summary of the updates to those programs.
Federal Pandemic Unemployment Compensation
The CAA includes a modified version of the Federal Pandemic Unemployment Compensation (FPUC) program, which expired in July 2020. That program provided an extra $600 per week benefit to anyone receiving state unemployment benefits. The CAA revives the supplement, but reduces the weekly benefit amount to $300. The new FPUC payment is available to recipients of state unemployment benefits from December 26, 2020 through March 14, 2021.
Pandemic Emergency Unemployment Compensation
The CAA extends the CARES Act’s Pandemic Emergency Unemployment Compensation (PEUC) benefits, which provided up to 13 weeks extended unemployment benefits through December 31, 2020, to individuals who had exhausted their state unemployment benefits (most states cap assistance after 26 weeks of benefits). The CAA provides PEUC benefits to eligible workers for another 11 weeks, i.e., for up to 50 weeks in total. To receive the benefit, new applicants must become eligible before March 14, 2021 (the expiration date of the PEUC extension), while those already receiving assistance may continue to collect through April 4, 2021. The U.S. Department of Labor provides further guidance about eligibility:
Any individual who established eligibility for PEUC before the date of enactment of the [CAA] (December 27, 2020), including PEUC exhaustees and current PEUC recipients, will have his or her PEUC accounts augmented by an amount equal to an additional 11 times the individual’s average [weekly benefit amount]…However, such additional amounts are ONLY payable with respect to a week of unemployment beginning on or after the date of enactment of the [CAA].”
Pandemic Unemployment Assistance
The CARES Act created the Pandemic Unemployment Assistance (PUA) program to provide unemployment benefits to affected workers, who did not meet the traditional unemployment eligibility requirements, such as certain gig-economy workers and independent contractors (which we previously blogged about eligibility here). As with PEUC, new PUA qualified applicants must become eligible before March 14, 2021 (the expiration date of the PUA extension), while those already receiving assistance may continue to collect through April 4, 2021. To combat unemployment insurance fraud, the CAA imposes new verification requirements. Whereas the CARES Act only required self-certification, PUA applicants seeking benefits after January 31, 2021, must provide documentation to substantiate their income eligibility within 21 days of their application submission. Individuals already receiving benefits must provide the confirming documentation within 90 days of their application or risk disqualification and repayment obligations.
In addition, the law requires states to verify the identity of all PUA applicants and to design a process for identifying and dealing with recipients who refuse offers of suitable work without good cause.
Mixed Earner Unemployment Compensation
The CAA includes an optional new Mixed Earner Unemployment Compensation (MEUC) program to address a gap in the CARES Act, which had excluded mixed earners.
Mixed earners are workers who receive some income on a W-2 basis and other income on a 1099 basis, typically those such as freelancers, artists, independent contractors, Uber drivers and, the like, who earn most of their living through gigs and who supplement their income by working part-time in traditional employment. Under the CARES Act, a mixed-earner had to choose between applying for traditional unemployment benefits based on their W-2 wages, or for PUA benefits based on their self-employed 1099 income. The applicant could not claim both. Under the MEUC, mixed earners who (i) reported at least $5,000 of self-employment income in the last taxable year and (ii) receive at least $1 of unemployment insurance in any program other than the PUA (i.e., state unemployment insurance or PEUC extended benefits) may be eligible to receive an additional $100 per week, in addition to their FPUC benefit —for a total of $400 per week.
States may choose whether to participate in the MEUC program. For those that do, MEUC benefits will be available to eligible beneficiaries between December 27, 2020, and March 14, 2021. Several jurisdictions have already expressed interest in opting in, including New York, California, Connecticut, Illinois, and Washington, D.C.
Other Provisions: Of additional note, the CAA also provides additional funding and deadline extensions for several other programs, including Paycheck Protection Program (PPP) loans (which we previously reported on here), tax credits for COVID-19 paid sick and family leave (which we blogged about here), and the option for employers to postpone withholding of social security taxes (which we previously covered here).
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Please contact Susan Gross Sholinsky and Jillian M. de Chavez-Lau for assistance with questions regarding compliance with the new CAA provisions discussed.
Jenna D. Russell, a Law Clerk – Admission Pending (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this post.