PUC and PPP Intersection
May 5, 2020
By: Robert G. Tweel
What is the relationship between Pandemic Unemployment Compensation ("PUC") and the payroll requirements of the Paycheck Protection Program ("PPP") loan forgiveness? The PPP rules tie loan forgiveness to an employer’s payroll, full-time equivalent census, and reductions in payroll. Pandemic Unemployment Compensation provides enhanced unemployment benefits of $600 per week. But there is tension between these two programs. For example, what happens when a worker declines to return to work because the unemployment benefits under PUC are greater than the salary they would receive? More importantly for some employers, should they recall these employees if they are currently well provided for by the benefits received through PUC?
We will get to these questions, but first we should break down PUC enhanced benefits availability and eligibility requirements.
Availability of PUC Enhanced Benefits
PUC enhanced benefits are available through any week ending on or before July 31. For state unemployment programs ending their week on Sunday, benefits will be available through July 26, and for Saturday end dates, July 25. Remember, the individual employee must still be eligible for at least $1 of underlying unemployment benefit for each of the qualifying weeks to receive PUC enhanced benefits.
Eligibility Requirements for PUC Enhanced Benefits
So, the CARES Act did expand the availability of unemployment compensation to certain individuals (for example, self-employed, those seeking part-time employment, and those on reduced hours), and it expanded the amount of time that benefits are available (from 26 weeks to 39 weeks); but, an otherwise eligible individual still must satisfy three requirements: (1) they are able to work, (2) they are available for work, and (3) they are actively seeking work.
Because these three requirements continue to apply for an individual to be eligible for underlying benefits, the following actions can impact an individual's eligibility:
Declining To Return to Work -- an individual who has been temporarily laid off because of COVID-19 must return to work if he or she is called back if they wish to remain eligible for unemployment benefits. Refusing to return to a job when there is available work and continuing to file unemployment claims can be considered fraud and potentially disqualify an individual from receiving benefits.
Quitting A Job Without Good Cause -- Workers who quit a job without good cause are not eligible for unemployment benefits. If a workplace is operating during the COVID-19 pandemic, workers applying for unemployment benefits may be required to provide a doctor’s note when their claim is adjudicated. Under current laws, quitting a job due to fear of exposure to COVID-19 without advice from a health care provider is not considered good cause for quitting.
Declining Suitable Work -- If an unemployed person is offered a comparable job with comparable wages and hours to their previous job but refuses to accept the offer, they should be disqualified from receiving benefits, under current law.
Working Reduced Hours -- Workers who are called back by their employer but work reduced hours may still qualify for unemployment benefits. These workers should continue to file weekly claims at and report all earnings. If a worker is earning more than their previous weekly benefit amount, they will not be eligible for benefits that week. For more information visit www.workforcewv.org.
Back to our hypotheticals
First, if an employer calls an employee back to work, the employee will likely not be eligible for unemployment benefits. The SBA clarified that such refusal will not count as reduction in FTE concerning the reduction in PPP forgiveness.
Second, the issue of which is best for the employer will likely depend upon when the employer will be fully operational. The forgiveness provisions of the PPP also create a tension in that the employer needs to meet certain payroll amounts in the 8-week forgiveness period and will need employees to do so. Employers should first weigh the requirements for loan forgiveness to determine how best to recall employees to work, and then, if there is any flexibility in the payroll amounts, the employer can determine whether to leave any of the employees on PUC enhanced benefits. Employers still need make sure these that these recall decisions, however, are based on legitimate, non-discriminatory reasons unrelated to any protected class.