On August 8, 2020, President Donald Trump issued a presidential memorandum that addresses the need for additional assistance for workers who have lost wages due to the ongoing COVID-19 pandemic. The memorandum on wage assistance contains three parts:
- It allows for up to $400 per week in wages assistance for those persons unemployed due to COVID-19. Pursuant to the memorandum, individual states would pay 25 percent of the $400 and the federal government, through the Federal Emergency Management Agency (FEMA), would pay the other $300 per week.
- It encourages the states to use the more than $80 billion in remaining Coronavirus Aid, Relief, and Economic Security (CARES) Act funds to pay the 25 percent share of additional unemployment benefit (i.e., $100 per covered individual per week).
- It directs the U.S. Department of Homeland Security, acting through FEMA, to make available up to $44 billion in its Disaster Relief Fund (DRF) to states that request the funds.
On August 12, 2020, the U.S. Department of Labor (DOL) issued Unemployment Insurance Program Letter No. 27-20 providing clarification for the states with regard to the unemployment portion of the memorandum, and provided a name for the temporary unemployment insurance benefits: “Lost Wages Assistance” (LWA). Program Letter 27-20 answers many questions raised by the individual states regarding the memorandum. The DOL program letter provides the following clarifications to states regarding the new wage assistance program.
Administration of LWA Benefits
Claimants in most unemployment insurance (UI) programs are eligible for up to $400 per week in additional benefits, starting “with weeks of unemployment ending on or after August 1, 2020,” and ending December 27, 2020, at the latest. Once the allocated funds are exhausted, the LWA program will end. LWA benefits will be administered by states and territories through a grant agreement with FEMA and with support from the DOL.
Qualification for LWA
To qualify for LWA benefits, an individual must “provide self-certification that he or she is unemployed or partially unemployed due to disruptions caused by COVID-19,” and also must confirm that he or she is receiving at least $100 of unemployment benefits for the week for which LWA is sought through regular unemployment compensation or through any of the following unemployment programs:
- “Unemployment Compensation for Federal Employees (UCFE);
- Unemployment Compensation for Ex-Servicemembers (UCX);
- Pandemic Emergency Unemployment Compensation (PEUC);
- Pandemic Unemployment Assistance (PUA);
- Extended Benefits (EB);
- Short-Time Compensation (STC);
- Trade Readjustment Allowances (TRA); and
- Payments under the Self-Employment Assistance (SEA) program.”
LWA is not available for individuals receiving assistance through Disaster Unemployment Assistance (DUA). The DOL guidance also states the following:
[A] number of state laws include provisions for extending the potential duration of benefits during periods of high unemployment for individuals in approved training who exhaust benefits, or for a variety of other reasons. Although some state laws call these programs “extended benefits,” the Department uses the term “additional benefits” (AB) for these state programs to avoid confusion with the Federal-State EB program. LWA is not payable to individuals who are receiving AB payments.
LWA Program Funding and Benefit Amounts
LWA is funded by FEMA through a joint federal-state agreement and provides the states with two benefit options.
Option 1 ($400 per week benefit)
For the $400 per week benefit, an individual state must contribute 25 percent ($100) and the federal government will cover 75 percent of the cost ($300). States are encouraged to satisfy the 25 percent state match requirement and provide the additional $100 in benefits either through allocations of the state’s Coronavirus Relief Funds (CRF), provided under Title V of the CARES Act, or other state funding.
Option 2 ($300 per week benefit)
For the $300 per week benefit, FEMA will fund the entire benefit. Individual states may choose to satisfy the 25 percent state match without allocating additional state funds. The DOL will consider the payment of regular state UI unemployment benefits to satisfy the 25 percent match requirement.
Duration of LWA Benefit Program
The LWA program will begin on the week ending August 1, 2020. According to the presidential memorandum and the DOL guidance, the program will end on December 27, 2020, or earlier if any of the following triggers are met:
- “FEMA expends the $44 billion from the DRF account” prior to that date;
- “[t]he balance of the DRF decreases to $25 billion”; or
- “[l]egislation is enacted that provides, due to the COVID-19 outbreak, supplemental federal unemployment compensation or similar compensation for unemployed or underemployed individuals.”
Of important note, FEMA estimates that the LWA funds will be exhausted in four (4) to five (5) weeks based on current unemployment numbers.
Detail on Beginning and End Dates per State
The DOL clarified the timing for LWA payments for states that differ on the day of the week when unemployment starts. “[I]n states where the week of unemployment ends on a Saturday, the first week that LWA may be paid is the week ending August 1, 2020. For states where the week of unemployment ends on a Sunday, the first week that LWA is payable is the week ending August 2, 2020.”
The DOL also clarified the timing for payments at the end of the program, stating the following:
LWA is not payable for any week of unemployment ending after December 27, 2020. Accordingly, for states where the week of unemployment ends on a Saturday, the last week that LWA may be paid is the week ending December 26, 2020. For states where the week of unemployment ends on a Sunday, the last week that LWA is payable is the week ending December 27, 2020.
States will first have to sign on to the LWA program and determine which level of additional LWA benefit will be provided. States will then “need to develop a self-certification process in accordance with FEMA instructions for claimants to certify weekly that they are unemployed or partially unemployed due to disruptions caused by COVID-19.”
State Enactment of the LWA Benefit
We are tracking state enactment of the LWA benefits. Most states have had their grants approved by FEMA. Only South Dakota has indicated that it will not apply. Nebraska has not yet given any indication as to its intent to apply or at what amount.
The stimulus amounts offered by each state total either $300 per month or $400 per month as represented by the below map.
Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar programs.