On Saturday, May 9, 2020, the U.S. Department of Labor (“DOL”) issued new guidance that attempts to answer various questions about the Federal Pandemic Unemployment Compensation (“FPUC”) Program under the CARES Act. The guidance covers three categories relating to FPUC payments under the CARES Act: issuing payments, overpayments and recovery, and financial information and reporting. Among other things, the guidance provides that part-time workers can receive FPUC payments, unless they are making more money at the part-time job than they receive in unemployment benefits.

The guidance further states that FPUC payments are subject to federal income tax withholding, like regular unemployment benefits. Additionally, the guidance directs states to note which unemployment program people collect enhanced benefits through because the federal government is recording the total amount of enhanced benefits each program disburses. Below is a summary of the DOL’s guidance as it relates to the FPUC Program.

Issuing Payments:

  • States must make FPUC payments on the same schedule as the states’ regular unemployment compensation payments.
  • If an individual’s unemployment compensation benefits are reduced to zero because of a benefit offset, an individual is still eligible to receive FPUC payments. Benefits offsets are considered “payments” as the payment is still being made to the individual, but part of the payment is offset and used to repay the previous overpayment. Therefore, the individual is deemed to have received unemployment compensation for the week and is eligible to receive FPUC for the week.
  • An individual must be eligible to receive at least one dollar ($1) of underling benefits for the claimed week to be eligible to receive FPUC payments.
  • An individual working part-time who otherwise meets state eligibility requirements for the underlying benefits is eligible to receive the FPUC payment.
  • All earnings by an individual are deducted from the underlying unemployment compensation benefit payment. If an individual’s earnings reduce the week’s underlying benefit payment to zero, the individual would not be eligible for the FPUC for that week.
  • FPUC benefits are subject to federal income tax withholding.
  • If the state law requires notification of the final unemployment compensation payment, then states must notify an individual when they receive a final FPUC payment.

Overpayments and Recovery:

  • An FPUC payment is an overpayment any time an individual receives an FPUC payment for which the individual was not eligible.
  • FPUC payments must be used to offset intrastate state or federal unemployment compensation overpayments.
  • FPUC payments must be offset to recover unemployment compensation overpayments for other states.
  • States must offset both the underlying benefit payment and the FPUC payment to recover state or federal unemployment compensation overpayments.
  • A state does not have to offset the same percentage from the underlying benefit payment as the FPUC payment. Instead, a state can offset the underlying benefit payment based on its own law and then offset the FPUC benefit separately.
  • States cannot suspend benefit offsets to provide relief to unemployed individuals.
  • Under Section 2104(f)(2) of the CARES Act, states may apply their own state law waiver provisions to FPUC overpayments if the FPUC payment was without fault on the part of the individual and such repayment would be contrary to equity and good conscience.
  • Individuals who fraudulently obtain FPUC payments are subject to prosecution under 18 U.S.C. §1001, among other federal criminal statutes.

Financial Information and Reporting

  • FPUC benefit disbursements need to be reported on a program specific basis. States must report program specific FPUC disbursements in the “comments” section of the ETA 2112 report as follows: UI $$$, UCFE $$$, UCX $$$, PEUC $$$, EB $$$, PUA $$$, Other $$$. The total must reconcile to amounts reported on line 42b, column F.
  • The grant awards to states for programs under the CARES Act will be issued under a separate grant.
  • States will need to provide quarterly status reporting regarding supplemental budget requests received for FPUC implementation.

A copy of the DOL’s guidance can be found here.

For more information, please contact the Stevens & Lee attorney with whom you regularly work.