Federal programs will cover the additional costs of expanded unemployment compensation benefits enacted by the Coronavirus Aid, Relief and Economic Security Act.
Section 2014 of the CARES Act provides a temporary $600 weekly benefit to eligible workers in addition to the benefits they are also receiving from state unemployment programs.
U.S. Department of Labor guidance indicates that for contributing employers, these payments are 100% federally funded and that state cannot charge employers for any benefits paid through the Federal Pandemic Unemployment Compensation.
FPUC benefit payments will end after payments for the last week of unemployment before July 31, 2020. Employee usage of the program will not impact an employer's experience ratings.
The federal government is also covering state costs for administering the FPUC program.
The FPUC program is one of three federal unemployment initiatives sparked by the coronavirus pandemic.
Self-employed and independent contractors, others not eligible for regular extended benefits, and those who exhaust state benefits can apply for Pandemic Unemployment Assistance.
The federal Pandemic Emergency Unemployment Compensation program also provides an additional 13 weeks of benefits if a claimant finishes the standard 26 weeks of state benefits.
The programs are welcome news for residents and the many Connecticut employers forced to lay off some or all of their employees due to restrictions placed on them because of the pandemic.
To date, over 280,000 unemployment claims have been filed with the Connecticut Department of Labor since the second week of March, leading to a five-week delay in processing payments.
Consider that the state lost about 120,000 jobs during the 2008-2010 recession, with weekly unemployment claims never exceeding 5,000.
The surge in claims will quickly drain the state's unemployment trust fund, which was at about half the level required for solvency prior to the pandemic.
The department says the fund currently has about $650 million, enough to last two to three months, and that it is in the process of taking out a federal loan.
Federal loans were the mechanism the state used during the last recession to cover unemployment claims, with assessments levied on Connecticut employers to repay those loans.
Employers are likely to see an increase in their unemployment tax experience ratings, and possibly additional assessments to pay down any federal loans.
The only question about the U.S. DOL guidance is with respect to the minority of employers who are reimbursing employers rather than contributing employers.
Typically, reimbursing employers are state and local governments and native tribes that elect to be reimbursing employers.
It is unclear whether the FPUC benefits available to the employees of reimbursing employers will be fully federally funded, or partially funded.
Additional guidance and clarification has been requested on this point.