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COVID-19 Relief Law Expands Unemployment Insurance Help to Self-Employed and Independent Contractors




By: J. Brooken Smith


The outbreak of the novel coronavirus disease, COVID-19, throughout the United States has forced many states to take sweeping action in an effort to arrest the spread of the virus and to mitigate its impact on public health. Kentucky, like other states, has imposed social distancing requirements and restricted many non-essential business operations that are having far-flung effects on our way of life and disrupting the economy. The financial and economic impact caused by government action has, in turn, lead to unprecedented restructuring at the federal and state level of unemployment programs to provide temporary assistance to workers whose jobs have been affected by COVID-19, including many who previously were ineligible to receive unemployment benefits.

At the federal level, on Friday, March 27, 2020, President Trump signed H.R. 748, commonly known as the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, into law. Widely known for providing direct financial support to many middle-class individuals and families during the current public health emergency, the CARES Act also significantly expands unemployment insurance to self-employed individuals, independent contractors, and individuals do not have sufficient work history or whose benefits have been exhausted.

In particular, Section 2102 creates a Pandemic Unemployment Assistance program that provides temporary unemployment assistance to “covered individuals” who become unemployed, partially unemployed, or unable to work due to the COVID-19 outbreak. A “covered individual” is defined to mean an individual who is not eligible for regular compensation or extended benefits under state or federal law, including an individual who has exhasted all rights to regular unemployment or extended benefits. To qualify, an individual must certify he or she is otherwise able to and available to work, or is self-employed, seeking part-time employment, does not have sufficient work history, or would otherwise not qualify for regular benefits, and is unemployed, partially unemployed, or unavailable to work due to the COVID-19 emergency. Section 2102 identifies eleven (11) circumstances that would qualify an individual for assistance, including being diagnosed with COVID-19, caring for a family member who has been diagnosed with the disease, having primary caregiving responsibility for someone who is unable to attend school because of COVID-19, and being unable to reach the place of employment because of a quarantine imposed as a result of this emergency, among others. Individuals who have the ability to telework with pay or are receiving paid sick leave or other paid leave benefits are not eligible for Pandemic Unemployment Assistance.

Temporary assistance provided in Section 2102 is available without having to serve a waiting period under state law. However, this does not usher in a permanent change to the unemployment scheme; the Pandemic Unemployment Assistance program is set to expire on on December 31, 2020.

In addition to expanding coverage to new classifications of workers, the CARES Act also boosts the amount of assistance and extends the duration of benefits. Covered individuals will receive $600 on top of the weekly benefit amount authorized under state law for up to 39 weeks, as opposed to the maximum duration of 26 weeks under Kentucky law. Weekly benefit assistance for self-employed and other individuals who ordinarily do not qualify for unemployment will be calculated in accordance with 20 C.F.R. § 625.6.

Employers who fund unemployment benefits through quarterly taxes or reimbursement may wonder who will pay for these new and expanded benefits. Section 2102(f) and (g) requires the Secretary of the Treasury to transfer such sums as are necessary from the general fund of the Treasury to the extended unemployment account of the Unemployment Trust Fund to pay States “in an amount equal to 100 percent of . . . the total amount of assistance provided by the State.” So, it appears that a business’s contribution rates established under state law should not be affected by the Pandemic Unemployment Assistance program.

Closer to home, on March 28, 2020, Governor Andy Beshear signed the agreement with the U.S. Department of Labor required by Section 2102(f) of the CARES Act to implement, and fund, the Pandemic Unemployment Assistance program in Kentucky. This action follows Executive Order 2020-235, in which Governor Beshear invoked emergency powers under KRS Chapter 39A to direct that state unemployment laws be liberally construed in accordance with guidance from the U.S. Department of Labor in the application of standards for ability to work, availability to work, work-search activities and suitable work and to waive the waiting week period under KRS 341.350(2).

The General Assembly has also passed emergency legislation in the form of SB 150 that would grant the Governor the express authority to waive or suspend unemployment provisions of KRS Chapter 341 and Title 787 of the Kentucky Administrative Regulations to protect workers affected by Executive Orders issued during the state of emergency. SB 150 passed both chambers unanimously on March 26, 2020, but at the time of this publication has not been signed by Governor Beshear it into law.

With the increasing likelihood that the COVID-19 emergency will continue for several more weeks, the CARES Act should help ease the anxiety felt by many individuals whose work and businesses are disrupted but who could not otherwise turn to unemployment assistance to help weather the storm. However, as is almost always the case, the implementation of the Act is likely to come with its own set of challenges. The experienced attorneys at Swansburg & Smith, PLLC stand ready to assist businesses and employers who have questions about how the Act might impact their rights and obligations under Kentucky’s unemployment insurance laws.

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