If you decide to temporarily lay off employees due to a business downturn or closure as a result of COVID-19, your employees may be eligible for Unemployment Compensation (UC) benefits.  You need to keep in mind the following when deciding on layoffs and advising employees on filing for UC benefits:

  • In response to the COVID-19 Pandemic, the standard waiting period has been temporarily suspended. That is, employees can file immediately to receive UC benefits. There is no 1-week waiting period, nor are there any work-search and registration requirements for employees.
  • The Department is encouraging employers and employees to first exhaust any paid leave that is available. Paid leave is typically available immediately and pays the employee at a higher rate than UC. UC benefits may take 2 – 4 weeks to receive and may replace only 50% of typical pay.
  • Please click on the following link which will allow you to generally determine what weekly UC benefit an employee will be entitled to based upon their highest quarterly wage during the time period specified by the Unemployment rules: UC Benefits Chart. For example, if the highest quarterly rate of compensation was $14,000, the employee would be entitled to a weekly benefit rate (“WBR”) of $550.  A number of rules apply to this calculation.
  • An employer’s UC tax rate will not increase if the business is temporarily closed due to COVID-19, and the employer will be granted a Relief from Charges.
  • An employer’s UC tax rate will not be affected if health insurance benefits are provided by the employer to the employee during the time the employee is temporarily laid off as such benefits do not affect the amount of UC benefits provided to the employee.
  • An owner of a business is not entitled to UC benefits in the event that the business temporarily or permanently closes.
  • An employee may be eligible for UC benefits if they are told to stay home by their employer because they are a risk of spreading or contracting COVID-19.
  • Employees can file a claim if they have COVID-19 and cannot come to work.
  • Employees can file for UC benefits if an employer reduces their hours because of COVID-19.
  • Employees can file for UC benefits if they are told to isolate or quarantine.

Many employers are faced with layoffs or temporary reduction of hours during the pandemic.  The federal and state governments are changing the laws in response to COVID-19. It is imperative that employers know the legal landscape before making a decision. Contact Lawrence J. Maiello or John H. Prorok at Maiello Brungo & Maiello, LLP for legal counsel in navigating these difficult decisions.

John H. Prorok
John Prorok

John Prorok possesses an invaluable understanding of privately held business owners’ needs in business planning, corporate formation, and transactions. He frequently speaks and counsels emerging and start‐up enterprises, offering insightful legal strategies toward success.