Tuesday, May 5, 2020


As we all continue to adjust to what we are calling the “new normal,” one of the most abnormal issues that we are having to address is unemployment compensation. Generally speaking, unemployment benefits are calculated by adding a person’s wages earned during the two quarters when they earned the most, taking forty-seven (47%) of that number and dividing by twenty-six (26) to determine the weekly unemployment benefit. Typically, the maximum weekly amount is $471 with the benefits available for twenty-six (26) weeks.

Unemployment benefits are not meant to replace a person’s lost wages in their entirety. The theory of unemployment compensation is that unemployed persons would receive enough money to hold them over until they could find new work. It was never intended that employees be paid so much that finding new work actually costs them money, but that is exactly what is occurring in the “new normal.”

Under the federal CARES Act, any individual who qualifies to receive at least one dollar ($1) of benefits during a claimed week is eligible to receive $600 under the Federal Pandemic Unemployment Compensation benefits provision of the CARES Act. In some cases, the additional federal money results in unemployed persons receiving almost their full weekly wages. In other cases, employees have made more in a week on unemployment than they made while they were working. This is a particularly big problem with part-time employees. A part-time employee making minimum wage who has been laid off or had their hours reduced due to COVID-19 often far exceeds their weekly wages while on unemployment. These FPUC benefits will continue to be available through July 31, 2020, so getting these part-time employees back to work may be difficult, at least in the short-term.

Another problem, in addition to employees not looking very hard for new work, is employees refusing to work reduced hours because unemployment compensation pays better. We have received numerous calls from employers who are frustrated because their employees have said that if their hours are reduced, they may just go on unemployment.

Technically, employees cannot just refuse to work when the employer has work for them to do. Refusal to work would be considered insubordination, and in addition, refusing available work may constitute voluntarily “quitting” rendering the employee ineligible for benefits. Nevertheless, many employers have expressed concerns that if they have their employees work three or four days in a workweek, they will not qualify for unemployment at all, and all they will get is pay for the reduced work schedule. This is certainly a confounding situation for both employers and their employees.

Most employers want to take care of their employees during these difficult times. However, where there is work to do, employers still need it done and they have a right to expect that their employees will do it. There is no simple solution to this problem. One option is for employers to make sure that an employee would qualify for at least some unemployment benefits by scheduling them so that this occurs. Available work could be spread out among all available employees. The work would be done, and the employees would still likely qualify for unemployment. If this is the case, then the employee will get the minimal amount, plus the $600.

Another option is to determine the work needs and schedule some employees to work their regular full schedules do get all of the work done. Other employees would be furloughed or laid off and would then qualify for unemployment benefits. Certainly, we recognize that these are difficult choices, and we are happy to assist employers struggling with these issues.