I have been getting this question across several articles published around the enhanced unemployment benefit programs now in place under the CARES act, enacted to address the COVID-19 induced economic slowdown and job losses. Fortunately the Department of Labor (DOL) has issued Unemployment Insurance Program Letters that confirm the fact that individuals who are entitled to receive any portion of their state’s regular unemployment compensation (UC) will also receive the $600 flat weekly payment through July 31, 2020.
This UI program letter focuses on Section 2104 of the CARES Act, which authorizes the temporary Federal Pandemic Unemployment Compensation (FPUC) program. This program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs.
The letter states that the FPUC $600 payment is payable for weeks of unemployment beginning on or after the date on which the state enters into an agreement with the Department of Labor. In states where the week of unemployment ends on a Saturday, the first week for which FPUC may be paid is the week ending April 4, 2020, provided an agreement was in place no later than March 28, 2020. In states where the week of unemployment ends on a Sunday, the first week for which FPUC may be paid is the week ending April 5, 2020, provided an agreement was in place no later than March 29, 2020. The cost of the additional $600 payments to eligible individuals each week is 100% federally funded.
So it seems pretty clear from the remaining DOL guidance (Appendix D-4) that qualifying for a partial or nominal amount of UI compensation (i.e the case for part time employees) would qualify the employee for the entire $600 weekly payment. Or as stated in the DOL guidance, even if the individual is eligible to receive at least one dollar ($1) of underlying benefits for the claimed week, the claimant will receive the full $600 FPUC.
Now many states, like PA and CA, offer Partial Unemployment Benefit Credits to offset the impacts of reduced benefits from part time work, but in many higher income states this won’t make much of an impact. Also with the $600 stimulus payment now in play, many people who don’t qualify for even $1 of unemployment insurance won’t get this supplementary payment for the next four months it is in effect. Which could make them worse overall.
One important note in the DOL guidance letter is that individuals whose underlying benefit payments are intercepted to pay debts (e.g., over payments) are eligible for the $600 FPUC, even if 100% of their weekly benefit amount is intercepted. Benefits intercepted to pay debts are considered to be compensation for the week. Child support obligations however must be deducted from FPUC payments in the same manner and to the same extent as these obligations are deducted from regular UC.
Also the DOL is clear that the $600 payment is taxable and will be included in the year end 1099G. Beneficiaries may be required to withhold taxes for this payment.