The U.S. Department of Labor (DOL) clarified the effect of President Donald Trump’s recent order that authorized additional funding for unemployment benefits. However, it’s unclear how long the funds will last.
The August 8 order, technically a “presidential memorandum,” offers $300 per week in additional unemployment benefits if the state agrees to put up $100 of their own. However, the DOL is interpreting this state matching obligation loosely.
How It Works
States wishing to provide claimants with an extra $400 can supply their own share from amounts previously allocated to them under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, or other state funding, the DOL indicated in Unemployment Insurance Program Letter (UIPL) No. 27-20.
States also may choose to count funds already used to provide regular state UI payments toward the state match, in which case eligible claimants will receive $300 from the federal government in addition to their weekly benefit amount.
The so-called Lost Wages Assistance (LWA) authorized by the presidential memo will be administered by states, and distributed as a supplemental payment, through a grant agreement with the Federal Emergency Management Agency (FEMA). LWA is payable to eligible claimants beginning with weeks of unemployment ending on or after August 1, 2020, through weeks of unemployment ending no later than December 27, 2020.
However, the LWA program may terminate before December 27 if:
- FEMA spends all of the $44 billion from the Disaster Relief Fund (DRF) account that Trump designated for the LWA program;
- The total balance of the DRF account decreases to $25 billion; or
- Congress breaks its current impasse and enacts legislation to provide supplemental unemployment benefits.
LWA is intended to pick up, in part, where the CARES Act’s Federal Pandemic Unemployment Compensation (FPUC), with its additional $600 per week on top of regular UI, left off. “If a state chooses to implement LWA, an otherwise eligible individual could receive his or her last payment of FPUC for the week-ending July 25, 2020 and then his or her first week of LWA for the week-ending August 1, 2020 or later,” the DOL explained.
Who Is Eligible?
As provided in the presidential memorandum, an “eligible claimant” is an individual who:
- Certifies to being fully or partially unemployed due to disruptions caused by COVID-19; and
- Receives, for the week of unemployment with respect to which LWA is sought, at least $100 in other unemployment benefits, be they regular state UI or other programs like the CARES Act’s Pandemic Emergency Unemployment Compensation or Pandemic Unemployment Assistance.
States will have to develop a self-certification process for this purpose. States have until September 10 to apply for the LWA funding.
Most states are likely to elect the $300 grant and count $100 of unemployment benefits to the individual as its 25 percent LWA “contribution,” according to a blog post from Alex Meier, an attorney with Seyfarth Shaw LLP.
Given the limited funds, however, “current expectations are that LWA will be available for approximately five weeks through roughly mid-September barring further congressional appropriations or a large number of states declining to accept LWA grants.”
David A. Slaughter, JD, is a Senior Legal Content Specialist. He focuses on providing, editing, and updating content related to employee benefits and privacy compliance, including the Thompson HR benefits products. Before coming to BLR, he was an employee benefits compliance editor with Thompson Information Services. Mr. Slaughter received his law degree from the University of Virginia and his B.A. from Dartmouth College. He is an associate member of the Virginia State Bar.