Member News

Troutman Pepper | Federal Unemployment Insurance Assistance is Back (For Now) – What Employers Need to Know

  • The CARES Act’s federal unemployment insurance supplement has expired, and a new executive order from the President has taken its place – for now.
  • Amid the uncertainty, employers should be aware of the impact on benefits eligibility for employees who refuse or are unwilling to return to work.

Who Needs to Know

Employers attempting to recall or hire employees currently receiving unemployment insurance benefits, and employers who may conduct future furloughs, layoffs, or job eliminations.

Why It Matters

The CARES Act’s additional $600 weekly federal unemployment insurance benefit has expired. Despite recent guidance issued by the Department of Labor to help states follow the President’s newest executive order providing for $300 to $400 in additional weekly benefits, many questions remain unanswered. At the same time, employers who have had trouble persuading employees to begin or return to work now have more tools at their disposal to encourage their workforces to return.

Federal unemployment insurance benefits have been reinstated, albeit in lesser amounts, through a recent executive order by the President. What does this mean for employers – and what are the impacts on benefits eligibility for employees who don’t want to return to work?

Presidential Memorandum Revives Federal Unemployment Insurance Assistance

Congress was unable to reach agreement on a possible extension of Federal Pandemic Unemployment Compensation (FPUC) or other federal supplements to state unemployment insurance benefits before the CARES FPUC expired in late July and has since struggled to reach consensus over continued benefits. In the meantime, President Trump issued a memorandum on August 8 with a new plan: states may provide eligible claimants an additional $400 in federal Lost Wage Assistance (LWA) benefits per week, in addition to the individual’s underlying state unemployment benefit, with the federal government covering only up to $300 of that amount.

DOL Issues Guidance to Help States Implement Presidential Memorandum

Despite confusion regarding the enforceability of such an executive order in the absence of action by Congress, the DOL issued guidance to states regarding how to enact the LWA program on August 12. The guidance instructs states to use money from their Coronavirus Relief Fund or other programs to cover their $100 portion. Alternatively, states may choose not to expend additional funds, instead counting funds that are already used to provide regular state UI payments. But in that case, eligible claimants will receive only the $300 federal benefit on top of their existing state UI payment (not $400, unless a state’s governor directs additional state funds to cover the $100 difference).

Potentially narrowed eligibility, coverage length and benefits

In addition to lesser benefits, fewer individuals will be eligible for benefits under the LWA program, as claimants must receive at least $100 in regular state benefits in order to receive LWA benefits in a given week. Previous guidance applicable to the CARES Act required that claimants receive only $1 in underlying state benefits to qualify for the additional federal benefit. This change means some lower-income individuals who only qualify for limited state benefits (or individuals who earn only a small amount of partial benefits due to other income) may not qualify for the federal LWA supplement.

The LWA program is payable retroactively for weeks of unemployment ending on or after August 1, 2020 and set to expire for weeks of unemployment ending before December 27, 2020. However, the program may sunset sooner under certain circumstances – including, importantly, if Congress enacts legislation providing federal unemployment funding. The states are left to grapple with uncertainty both as to whether they can afford to cover their $100 portion – and if the rules might change again.

Recalling Employees to Work When They’d Rather Collect Benefits

Under the CARES Act, some employees could earn more in combined federal FPUC and state benefits than wages, and for that reason, employers sometimes struggled to entice those individuals back to the workplace. A reduced federal benefit (whether under the August 8 memorandum or through later action by Congress) might help alleviate that challenge. But employers should be aware that in many cases, a refusal to return to work can render individuals ineligible to receive further benefits regardless.

Under most states’ laws, individuals are generally no longer eligible for benefits if they turn down an offer of work without “good cause.” Likewise, the DOL has previously indicated that quitting work without good cause to obtain UI benefits is fraud, and “individuals receiving regular unemployment compensation must act upon any referral to suitable employment and must accept any offer of suitable employment.” The same is true for individuals recalled from furlough to a previous position.

States Encouraged to Request Employers to Report Employee Refusals to Return to Work

Many states already require benefits recipients themselves to provide this information as part of their weekly certification process. (Again, a false answer by a claimant can constitute fraud). But the DOL has also recently “strongly encouraged” states to request that employers report employees who refuse to return to work “for reasons that do not support their continued eligibility for benefits,” even suggesting in a second August 12 guidance methods such as providing an option to report this information directly via email or a link on the state UI website, and also encouraging states to promote such reporting mechanisms on their social media platforms.

States are now choosing ways for employers to directly report employees’ refusals to return

Some states had mechanisms for reporting bad-faith refusals before the pandemic. Recently, however, many have begun to issue COVID-specific guidance or mechanisms for employers to report individual employees who turn down an offer of work. Multiple states (CaliforniaDelawareMississippiOhio and Virginia are just a few examples) allow employers to report directly on the state UI website or via letter to the UI office. Georgia issued a temporary rule stating that its temporary employer-filed partial claims requirement does not apply to an employee “with respect to any week in which the employer offered to restore the employee’s hours and pay to the pre-COVID-19 impacted level.” And South Carolina has taken it a step further by establishing a Recall Taskforce specifically to help review such claims. While an employer’s report of a refusal of work does not automatically mean a state UI office will find such refusal was not “good cause” sufficient to render an individual ineligible for benefits (as this determination is fact-specific and dependent upon individual state standards), employer reporting should expedite the decision-making and review process. Expect more similar state action following the DOL’s encouragement in the coming weeks.

Benefits Eligibility Impact of Other Reasons for Refusing to Return to Work

What about claimants who are unwilling to return to work for other reasons? For example, many states have historically found good cause to refuse an offer of work that creates concerns of health or safety risks, but only in very limited circumstances. Some states – Texas and Oregon, for example – have affirmatively extended such guidance to specific COVID-19 reasons in approving unemployment benefits in cases where individuals refuse to return to work for COVID-related reasons, and others could soon follow.

Be aware, too, that specific states may have other reasons constituting good cause. For example, employers implementing pay cuts should know that in some states an individual can turn down a job offer at certain reduced rates of pay (e.g. only 50% of their prior wage/standard wage for the job) and that would be a good cause refusal. Other states calculate factors like commute distance and the amount of time an individual has been out of work. In any case, the good cause determination will generally vary by individual situation and each state’s particular “good cause” rules.


  • Richard Gerakitis, Partner | richard.gerakitis[at]
  • Emily E. Schifter, Associate | emily.schifter[at]

Compliments of Troutman Pepper LLP – a member of the EACCNY.