UIPL_10-20_Change_1_acc.pdf

ETA Advisory File Text

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION Unemployment Insurance CO RRESPONDENCE SYMBOL OUI DL DA TE May 15 2020 RESCISSIONS None EXPIRATION DATE Continuing ADVISORY UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 10 -20 Change 1 TO STATE WORKFORCE AGENCIES FROM JOHN PALLASCH s Assistant Secretary SUBJECT Unemployment Compensation UC for Individuals Affected by the Coronavirus Disease 2019 COVID-19 Interpretation of Between and Within Terms Denial Provisions in Section 3304 a 6 A of the Federal Unemployment Tax Act FUTA 1. Purpose. To provide guidance to states regarding UC flexibilities related to COVID-19 specifically in determining eligibility of an individual whose employment is subject to the between and within terms denial provisions of Section 3304 a 6 A FUTA. 2. Action Requested. The Department of Labor s Department Employment and Training Administration ETA requests that State Workforce Administrators provide the information in this Unemployment Insurance Program Letter UIPL to appropriate program and other staff in state workforce systems as they respond to the economic effects of COVID-19. 3. Summary and Background. a. Summary This UIPL provides guidance to states on UC eligibility for an individual affected by COVID-19 whose employment is subject to the between and within terms denial provisions. This UIPL includes 1 an explanation of the between and within terms denial provisions 2 application of these provisions within the context of responding to the spread of COVID-19 3 application of these provisions as they relate to an individual working remotely 4 application of these provisions as they relate to an individual working in a nonprofessional capacity 5 guidance for determining whether an individual has a reasonable assurance of continued employment within the context of COVID-19 and 6 application of the between and within terms denial provisions for programs included in the Coronavirus Aid Relief and Economic Security CARES Act Public Law 116-136 . 2 b. Background The UI program is facing an unprecedented demand due to the economic effects of efforts to mitigate the spread of COVID -19. Many educational institutions are temporarily closing changin g semester and term dates or changing dates f or scheduled breaks in response to COVID -19. The Department addressed permissible flexibility for states under existing federal law in response to the COVID -19 pandemic with the publication of UIPL No. 10 -20 Unemployment Compensation UC for Individuals Affected by the Coronavirus Disease 2019 COVID -19 issued on March 12 2020. On March 27 2020 the President signed into law the CARES Act. This legislation provides emergency assistance and health care response for certain individuals families and businesses affected by the COVID -19 pandemic. The CARES Act includes the Relief for Workers Affected by Coronavirus Act set out in Title II Subtitle A. UIPL No. 14 -20 Coronavirus Aid Relief and Economi c Security CARES Act of 2020 Summary of Key Unemployment Insurance UI Provisions and Guidance Regarding Temporary Emergency State Staffing Flexibility issued April 2 2020 summarizes the various UC - related provisions within the CARES Act. 4. Guidanc e. Section 3304 a 6 A FUTA 26 U.S.C. 3304 a 6 A requires as a condition for employers in a state to receive credit against the Federal unemployment tax that the s tate law provide that UC be pa yable based on services to which Section 3309 a 1 FUTA 26 U.S.C. 330 9 a 1 applies in the same amount on the same terms and subject to the same conditions as UC payable on the bas is of other service subject to s tate law. M ajor mandates in this section include 1 cove rage of services perfo rmed for s tate and local governments and their instrumentalities and certain nonp rofit organizations and Federally - recognized Indian tribes 2 that the payment of UC to e mployees of such entities be made in the same amount on the same terms and subject to the same conditions as other service subject to UC law otherwise known as the equal treatment provision and 3 an exception to the equal treatment provision requiring deni al of UC based on certain educational services performed for such entities between and within academic terms . These conditions are required for employers in a s tate to receive credit against the Federal unemployment tax. The denial of UC based on services for educational institutions and educational service agencies between a cademic years and terms to certain employees is described in clauses i through v of 3304 a 6 A FUTA 26 U.S.C. 3304 a 6 A . These exceptions apply to three categories of employees 1 employees of an educational institution 2 employees of a n educational service agency and 3 if the state law provides for the optional denial in clause v of Section 3304 a 6 A FUTA 26 U.S.C. 3304 a 6 A employees who provide services to or on behalf of an educational institution. Clause i of Section 3304 a 6 A i FUTA 26 U.S.C. 3304 a 6 A i applies to services in an instructional research or principal administrative capacity professional capacity . 3 Clause ii of Section 3304 a 6 A ii FUTA 26 U.S.C. 3304 a 6 A ii applies to services in any other capacity and encompasses any services in other than an instructional research or principal administrative capacity regardless of the legal or educational requirements to perform such services nonprofessional capacity . Under these provisions certain employees in specified categories may not be paid UC based on such educational employment between academic years or terms if the employees have a contract or reasonable assurance of performing services in such educational employment in the following year or term. Additionally certain employees in these categories may also not be paid UC based on such educational employment during vacation periods or holiday recesses i.e. within terms if the employees have reasonable assurance of performing services in such educational employment in the remainder of a term. Between Terms Denial Provision The between terms denial provision is mandatory when services are performed in a professional capacity. The state has discretion in determining whether its state law includes the between terms denial provision to services in a nonprofessional capacity. When state law applies the between terms denial provision to services in a nonprofessional capacity if a claim is denied based on the between terms denial provision retroactive payment is required if no job is offered in the second year or term and the individual has filed timely continued claims. Specifically the between terms denial provision applies with respect to services in an instructional research or principal administrative capacity for an educational institution to which section 3309 a 1 applies compensation shall not be payable based on such services for any week commencing during the period between two successive academic years or terms or when an agreement provides instead for a similar period between two regular but not successive terms during such period to any individual if such individual performs such services in the first of such academic years or terms and if there is a contract or reasonable assurance that such individual will perform services in any such capacity for any educational institution in the second of such academic years or terms. 26 U.S.C. 3304 a 6 A i . Within Terms Denial Provision Application of the within terms denial provision is mandatory when services are performed in a professional capacity. The state has discretion in determining whether its state law includes the within terms denial provision to services in a non -professional capacity See Section 3304 a 6 A vi FUTA and page 3 of UIPL No. 05-17 . 4 Specifically t he within terms denial provision applies d uring an established and customary vacation period or holiday recess if such individual performs such services in the period immediately before such vacation period or holiday recess and there is a reasonable assurance that such individual will perform such services in the period immediately following such vacation period or holiday recess. 26 U.S. C. 3304 a 6 A iii . UIPL No. 05 -17 Interpretation of Contract and Reasonable Assurance in Section 3304 a 6 A of the Federal Unemployment Tax Act issued December 22 2 016 clarifies the Department s interpretation of the terms contract and reasonable assurance as used in Section 3304 a 6 A FUTA and assists states in applying these terms consistent with federal law requirements. a. Application of the between and within terms denial provisions as it relates to responding to the economi c effect of the COVID -19 pandemic . As discussed in UIPL No. 10 -20 the Department has a longstanding legal interpretation of Federal UC law that unemployment includes a reduction of both work hours and earnings. Therefore an individual who is not work ing but has not experienced a reduction in income including earnings paid sick leave and paid family leave is not eligible to receive UC for the week . If the school schedule changes because of the COVID -19 pandemic and an individual experiences bot h a reduction of work hours and earnings UC would generally be payable to such individual to whom the between and within terms denial provision s would otherwise apply . This is because weeks the individual would ordinarily be working but not due to cir cumstances surrounding the COVID -19 pandemic are not considered to be between two successive years or terms nor are they considered to be part of an established and customary vacation period or holiday recess. Below are three examples addressing ch anges to school operations and how they affect an individual s eligibility for UC during the COVID -19 pandemic . Example 1 Between Terms Semester or term ends earl ier than usual . If the educational institution or school system elects to end a semester term or school year earlier than usual in response to COVID -19 and there is a corresponding reduction in pay the individual s week or weeks of unemployment are not considered to be between two successive academic years or terms. Therefore the betw een terms denial provision does not apply to those weeks between the early termination date and the end of the regularly scheduled year or term . At the end of the regularly scheduled year or term the state must reassess the benefit entitlement of the individual to determine if the individual has a reasonable assurance or a contract to return at the start of the next regularly scheduled academic year or term . 5 Example 2 Within Terms Dates of a scheduled break are changed but the length of time rem ains the same . Where the educational institution or school system merely changes the dates of the break without extending its duration e.g. the break is earlier or later than usual but still one week or whatever the length of the norm al break would be this break would be deemed established and customary . Therefore if the individual has reasonable assurance of immediately returning after the break the within terms denial provision would apply . Example 3 Within Terms Dates of a scheduled break are extended . If the educational institution or school system extends the length of the break from the established and customary vacation period or holiday recess the state must consider the normal length of the vacation or break period for that educational institution as an established and customary vacation period or holiday recess during which time the denial applies. However any additional time included in the break would not be considered as part of the established and customary break . Therefore t he within terms denial provision would not apply to the additional time beyond the normal period of the break. b. Application of the between and within terms denial provisions to an individual working remotely. As noted above the defini tion of unemployment includes both a reduction in hours and a reduction in pay . Thus an individual who continue s to work remotely and is being paid is not considered unemployed and is therefore not eligible for UC . However to the extent the ind ividual experience s a reduction in hours and a reduction in pay the individual may be entitled to partial benefits under state law. c. Application of the between and within terms denial provisions to an individual working in a nonprofessional capacity . As discussed earlier the state has discretion in determining whether to apply the between and within terms denial provisions to services in a nonprofessional capacity. In a state where state law requires that either the between terms or within terms denial provision applies to an individual working in a nonprofessional capacity the same analysis as set forth in the three examples above will apply . In a state where state law requires that the between terms denial provision applies to an individ ual working in a nonprofessional capacity the state should encourage the individual who has a contract or reasonable assurances of employment in the following semester or term to continue claiming benefits on a weekly basis so that should no job result p ursuant to the contract or reasonable assurance the individual may be paid benefits retroactively. In response to the spread of COVID -19 it is permissible for a state to temporarily suspend the between and within terms denial provision s in state law for individual s working in a nonprofessional capacity consistent with the p rovisions under Section 6 3304 a 6 A ii and Section 3304 a 6 A vi FUTA . If a state chooses to do so it should consider the impacts on trust fund solvency. d. Determination of reasonable assurances in the context of the COVID -19 pandemic . The state must make a determination at the time of filing that reasonable assurances exist for employment in the fall semester or term based on information provided by the individual and the employing educational institution or school system. In the event a decision is later made by the employer that the educational institution or school system will not reopen as regularly scheduled or that a specific individual do es not have a reasonable assurance of employment in the same or similar capacity due to budget cuts or declining enrollment or for any other reason the state agency must re-assess the individual s entitlement to benefits . See UIPL No. 05 -17 for further guidance on the interpret ation of contract and reasonable assurance. e. Application of the between and within terms denial provision s to the CARES Act programs . i. Pandemic Unemployment Assistance P UA under Section 2102 of the CARES Act . PUA eligibility requires that an ind ividual is not eligible for regular UC Pandemic Emergency Unemployment Compensation PEUC or Extended Benefits EB and that the individual is unemployed partially unemployed or unable or unavailable for work because of a listed COVID -19 related reaso n in Section 2102 a 3 A ii I of the CARES Act. Between academic years or terms and during established and customary vacation period s or holiday recess es the individual is unemployed from the educational employment because they are between and with in terms. Therefore an individual is not unemployed from the individual s educational employment for one of the listed COVID -19 related reasons and cannot establish eligibility for PUA based on services subject to the between and within terms denial. However if an individual has other employment between academic years or terms or during established and customary vacation period s or holiday recess es that is not included in the between and within terms denial provisions discussed in this UIPL and is unemployed from that other employment because of a listed COVID -19 related reason the individual may be eligible for PUA. If an individual qualifies for PUA during the time period in which the between or within terms denial provision s would apply th en wages from the educational institution may not be used to establish the individual s weekly benefit amount for PUA . See UIPL No. 16 -20 Coronavirus Aid Relief and Economic Securit y CARES Act of 2020 Pandemic Unemployment Assistance PUA Progra m Operating Financial and Reporting Instructions issued April 5 2020 for additional details. 7 ii. Federal Pandemic Unemployment Compensation FPUC under Section 2105 of the CARES Act . The between and within terms denial provisions do not apply specifi cally to FPUC because it is based upon the individual s eligibility for an underlying benefit. If the individual is eligible to receive at least one dollar 1 of benefits for the claimed week the individual will be eligible for the 600 FPUC payment. See UIPL No. 15 -20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Federal Pandemic Unemployment Compensation FPUC Program Operating Financial and Reporting Instructions issued April 4 2020 for additional details. iii. PEUC under S ection 2107 of the CARES Act . The terms and conditions of state law that apply to claims for regular UC also appl y to claims for PEUC. If an individual is not eligible for regular UC because of the between and within terms denial provisions the indivi dual is also not eligible for PEUC. See UIPL No. 17 -20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Pandemic Emergency Unemployment Compensation PEUC Program Operating Financial and Reporting Instructions issued April 10 202 0 for additional details. 5. Inquiries . States should direct inquiries to covid -19 dol.gov and copy the appropriate Regional Office. 6. References . Coronavirus Aid Relief and Economic Security CARES Act Pub. L . 116 -136 including Title II Subtitle A Relief for Workers Affected by Coronavirus Act Section s 3304 a 6 A and 3309 a 1 of the Federal Unemployment Tax Act FUTA 26 U.S.C. 3304 a 6 A UIPL No. 17 -20 Coronavirus Aid Relief and Economic Sec urity CARES Act of 2020 Pandemic Emergency Unemployment Compensation PEUC Program Operating Financial and Reporting Instructions issued April 10 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 8452 UIPL No. 16 -20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Pandemic Unemployment Assistance PUA Program Operating Financial and Reporting Instructions issued April 5 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 4628 UIPL No. 15 -20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Federal Pandemic Unemployment Compensation FPUC Progr am Operating Financial and Reporting Instructions issued April 4 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 9297 UIPL No. 14 -20 Coronavirus Aid Relief and Econ omic Security CARES Act of 2020 Summary of Key Unemployment Insurance UI Provisions Regarding Temporary Emergency State Staffing Flexibility issued April 2 2020 https wdr.do leta.gov directives corr doc.cfm DOCN 3390 UIPL No. 10 -20 Unemployment Compensation UC for Individuals Affected by the Coronavirus Disease 2019 COVID -19 issued March 12 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 8893 and 8 UIPL No. 05 -17 Interpretation of Contract and Reasonable Assurance in Section 3304 a 6 A of the Federal Unemployment Tax Act issued December 22 201 6 https wdr.doleta.gov directives corr doc.cfm DOCN 8999 .