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Are Your Employees Better Off Unemployed (and you too)?

Updated: Mar 29, 2020

With what we see from the legislation that is about to pass, many or most (maybe all) of your employees could get more by filing for Unemployment Benefits than by staying employed and receiving Paid Leave for not working while you are shut down.

Therefore, you might likely be doing your employees a favor by terminating them outright. If so, you would want to do so prior to April 1 when Paid Leave provisions take effect under Phase 2 of this stimulus process.

It is becoming clearer that perhaps the $600 extra per week pushed for by the Democrats this week may have been intentional to not only put more money into the pockets of individual workers, but also to assist small business employers. Basically, the employer is getting an out from dishing out significant paid leave benefits while shut down, yet retaining employees.

Who would be covered by the expanded program?

The new bill would wrap in far more workers than are usually eligible for unemployment benefits, part-timers. The end result: Those who are unemployed, partially unemployed or who cannot work for a wide variety of coronavirus-related reasons would be more likely to receive benefits.

How much?

It depends on your state.

The idea is that unemployment benefits would be expanded in a bid to replace the average worker’s paycheck, The average worker earns about $1,000 a week, and unemployment benefits often replace roughly 40 to 45 percent of that. The expansion would pay an extra amount to fill the gap.

Under the plan, eligible workers would get an extra $600 per week on top of their state benefit. But some states are more generous than others.

States have the option of providing the entire amount of back unemployment and the $600 add-on in one payment, or sending the extra portion separately. But it must all be done on the same weekly basis. Also, the one-week waiting period has been waived in most states.

Example: A worker was making $1,000 per week in California; she’d be eligible for the maximum state unemployment benefit of $450 per week. Under the new program, she gets an additional $600 of federal pandemic unemployment compensation, for a total of $1,050, more than her original paycheck.

In the State of Washington --- A worker was making $1,000 per week; he’d be eligible for the state unemployment benefit of between $188-$790 per week. Under the new program, he gets an additional $600 of federal pandemic unemployment compensation. In most cases, full time or part time, the worker could get unemployment equal to their pay, or more.

In the State of Arizona, quite a bit less, and there’s new legislation --- A worker was making $1,000 per week; he’d be eligible for the state unemployment benefit of the maximum of $240 per week. Under the new program, he gets an additional $600 of federal pandemic unemployment compensation, equaling $840.

The new law just signed by Governor Ducey: The unemployed worker MUST accept offered work that pays more than 20% above the Arizona unemployment benefit. That appears to be $288 per week.

Each employee also needs to consider the ‘look back’ period. Each state is different, and each employee’s circumstances are clearly different. California, for example, looks back first to the 4 quarters prior to the last full quarter. If the employee files in March, unemployment is calculated based on October 2018 through September 2019. If wages are not at least $1300 in the highest quarter, the state automatically adds the most recent full quarter (Oct-Dec 2019) and drops the oldest quarter to calculate eligibility and the amount of the benefit.

Do employers under 25 employees have the legal right to terminate employees?

According to HR Dive:

Employers with fewer than 25 employees are exempt from the job-protected aspect of this leave, however, provided the following conditions are met:

  • An employee takes emergency leave as provided under the FFCRA.

  • The leave-taking employee's position is eliminated due to "economic conditions" or other changes that affect the employer's operations resulting from the public health emergency.

  • The employer makes "reasonable efforts" to restore the employee to a position equivalent to the position the employee held when leave commenced, with equivalent pay, benefits and other terms and conditions.

  • If those "reasonable efforts" fail, the employer makes an effort to contact the employee if an equivalent position becomes available, within a contact period spelled out in the bill.

In addition, in California Gov. Newsom suspended the California WARN Act which requires employers to provide workers and local government officials at least 60 days notice of a mass layoff or shutdown.

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