An Unemployment Insurance Roadmap for New York Employers

During the current COVID-19 crisis, over one million New Yorkers have applied for unemployment insurance (UI) and New York State has paid out over $7 billion in benefits. Despite these numbers, many employers do not understand the ins and outs of UI. Because of the COVID-19 UI enhancements, UI can be beneficial to both employers and employees.

The following Insight provides information for New York employers trying to understand UI benefits in general, as well as the enhanced federally funded UI benefits that are specific to the COVID-19 crisis.

What are the general eligibility requirements to receive New York UI benefits under normal circumstances?

In order to collect New York UI benefits, a claimant must (1) have enough previous employment to establish a base period; (2) have lost employment through no fault of the claimant (with some exceptions); (3) be ready, willing and able to work; and (4) be actively seeking work.1 In addition, claimants who lose their jobs as part of a temporary furlough are eligible to collect UI during their furlough.

Claimants may receive a different weekly New York benefit depending on their earnings over the past year. Claimants (and employers) may calculate the expected weekly benefit here.  

What are the eligibility requirements to receive Federal Pandemic Unemployment Compensation (FPUC) and Federal Pandemic Unemployment Assistance (PUA)?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides additional benefits – FPUC and PUA – to employees who suffer a loss of employment due to the COVID-19 pandemic.

On top of the weekly benefit under New York law, a claimant is also eligible to receive $600 weekly in FPUC until July 31, 2020. According to recent Department of Labor guidance, any claimant who is eligible for $1 or more in New York UI will also receive the $600 FPUC payment.

In addition, PUA provides weekly unemployment benefits to individuals who would not otherwise qualify for regular state UI benefits and are unable to continue working as a result of COVID-19.  For example, self-employed individuals (including gig workers2) and individuals without sufficient employment history for their base periods may also be eligible for PUA. Claimants, however, cannot receive PUA if they have the ability to telework or if they are currently receiving sick leave or other paid leave benefits.

A claimant’s PUA benefit rate is based on the claimant’s recent wages. However, a PUA recipient will receive at least 50% of the average weekly benefit amount in the state in which the claimant is filing for benefits. In New York, for January 27, 2020 through March 31, 2020, the minimum PUA benefit rate was $172. For April 1, 2020 through June 30, 2020, the minimum PUA benefit rate is $182. PUA sunsets on December 31, 2020.3

On top of the individuals referred to above who may qualify for PUA (gig workers, self-employed individuals, recent graduates without requisite work history), individuals may also qualify if they self-certify that they are unable to work and meet one or more of the below criteria:

  1. The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  2. A member of the individual's household has been diagnosed with COVID-19;
  3. The individual is providing care for a family member or a member of the individual's household who has been diagnosed with COVID-19;
  4. A child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work;
  5. The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;
  6. The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  7. The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;
  8. The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;
  9. The individual has to quit their job as a direct result of COVID-19;
  10. The individual's place of employment is closed as a direct result of the COVID-19 public health emergency; or
  11. The individual meets any additional criteria established by the Secretary of Labor for unemployment assistance under this section.

(The Coronavirus Aid, Relief, and Economic Security (CARES) Act, Sec. 2102).

Should employers be more concerned with UI fraud during the COVID-19 pandemic?

The PUA eligibility criteria receiving the most attention is #9, above, which states that individuals who quit a job as a direct result of COVID-19 may collect PUA. Many employers are concerned that employees will refuse to return to work so that they can continue to collect benefits, which may be more than their wages.  Recent guidance from the U.S. Department of Labor made clear that quitting work (i.e., refusing to return) without good cause and in order to obtain additional benefits is fraud.  If a claimant is found to have committed fraud, the claimant may be held liable to pay back the benefits and may be subject to criminal prosecution.

In instances where an employer suspects an employee included incorrect or false information in a UI application, the employer can report this behavior to the appropriate state agency. In New York, an employer should receive Form LO 400 after an employee submits an application for UI benefits. This form directs the employer to report any discrepancy in wage or disqualifying information within 10 days from the date of the notice. If the employer discovers a wage discrepancy or disqualifying information more than 10 days after the date on the Form LO 400 notice, employers may call the New York Department of Labor Fraud Hotline.

Moreover, employers may contact the claimant directly if work is available. Employers may also promptly notify the UI telephone claim center if: they are unable to contact the claimant for recall; the claimant has declined an offer of reemployment; or, they have information they were not aware of when they received Form LO 400 that may affect the claimant’s entitlement to UI benefits. If the charges appear incorrect for any other reason, employers may contact the Department of Labor, Liability and Determination Section.

What is the impact on my employees’ UI benefits if they work part-time, receive severance, or receive a payout of accrued vacation?

A. Part-time work

A claimant is ineligible for benefits if the claimant works four or more days per week or earns $504 or more per week.  For each day (or part of a day) a claimant works, the weekly benefit drops by 25%. The exception to this rule is if a claimant is working part-time as part of a shared work program administered through New York State.

Employers seeking to reduce work schedules and ensure that employees are able to earn UI benefits should be cognizant of scenarios where the employee’s weekly salary exceeds the weekly benefit amount, thereby precluding the employee from receiving regular UI benefits and FPUC. 

B. Severance

If a claimant is receiving severance, the claimant will only be eligible to receive unemployment benefits if: (1) the weekly severance payments are less than or equal to the maximum weekly benefit rate; or (2) the claimant receives the first severance payment more than 30 days after the last day worked.4 

C. Payouts of accrued time off

If the vacation and holiday pay is paid out as part of a layoff/furlough and the vacation was not scheduled in advance, it will have no impact on unemployment benefit eligibility. However, the claimant is ineligible if the claimant is actively receiving vacation pay for vacation time scheduled prior to the claimant’s last day of employment.5

What is work share?

Work share is a program offered by New York State that allows employers to reduce hours by 20% - 60% and allows employees to collect the percentage of their weekly unemployment benefit equal to the percentage by which their hours are reduced.  The calculation for earnings available through workshare is below:

(reduced wages) + [(percentage by which hours are reduced) x (weekly UI benefit)] + ($600 FPUC payment until July 31, 2020) = weekly employee compensation within work share

While a claimant is usually ineligible for benefits if the claimant makes more than $504 per week, that is not true of workshare, which allows an unlimited amount of earnings per week. Additionally, workshare payments in New York are 100% federally funded until December 31, 2020, and do not affect an employer’s unemployment insurance contribution rate.

More information on work share programs can be found here.

How does UI impact the employer?

UI benefits paid to claimants are charged to the accounts of employers for whom they worked. Every benefit payment charged to an employer’s experience rating account may have the effect of increasing that employer’s UI rate in future years. Employers are advised on Form IA 96, Notice of Experience Rating Charges, about all benefit payments to former employees that are charged to their accounts. This gives employers the opportunity to report any benefit payments they believe were incorrectly made. Form IA 96, and other similar requests for information pertaining to an UI claim, in addition to Form LO 400, must be received by the N.Y. Department of Labor within the number of days specified in the request and must provide adequate information.

What should employers tell their employees about unemployment insurance?  

Employers should not act as unemployment insurance advisors to their employees. As much as an employer may want to help its employees navigate the unemployment insurance process and maximize the employees’ benefits, it is never wise to give an employee advice on taxes, government benefits, or financial planning.

With the above said, New York employers are obligated to issue an employee Form IA 12.3, Record of Employment, upon termination and/or temporary furlough. This will provide the employee the necessary information to allow them to apply for UI. Beyond providing this form, however, the process of applying is a claimant-driven process.

New York employers considering UI in deciding how to restructure and/or bring back their workforce, or facing employees who refuse to return because they do not want to lose their benefits, should consult counsel on these complex topics.

See Footnotes

1 N.Y. Lab. Law § 591.

2 The Department of Labor published further guidance on PUA and clarified that gig workers qualify as “unemployed” under the Pandemic Unemployment Assistance (PUA) Program when they lose a significant amount of business because of COVID-19.

3 New York State guidance on PUA can be found here.

4 N.Y. Lab. Law § 591.

5 Id.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.