Guidance provided on emergency UI relief for state and local governments, certain nonprofits, and Indian tribes
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Monday, May 11, 2020

Guidance provided on emergency UI relief for state and local governments, certain nonprofits, and Indian tribes

By Payroll and Entitlements Editorial Staff

The Employment and Training Administration (ETA) has issued guidance to provide the states with instructions for implementing emergency unemployment relief for state and local governmental entities, certain nonprofit organizations, and federally recognized Indian tribes in Section 2103 of the CARES Act of 2020 (P.L. 116-136).

Information must be provided to state workforce systems. The ETA is requesting that state workforce administrators provide the information contained in Unemployment Insurance Program Letter (UIPL) 18-20 to appropriate program and other staff in state workforce systems as they implement the UI-related provisions that respond to the economic effects of COVID-19.

Flexibility by states encouraged for reimbursing employers. Under Section 2103(a) of the CARES Act, states are encouraged to interpret or amend their state unemployment compensation (UC) laws in a manner that provides maximum flexibility to reimbursing employers as it relates to timely payments in lieu of contributions and assessment of penalties and interest.

Upon payment from a reimbursing employer of the amount owed in lieu of contributions, the state may reimburse the employer for up to one-half of the amount of compensation paid by the state attributable to service with the employer.

These partial reimbursements apply to all payments made in lieu of contributions for weeks of unemployment beginning on or after March 13, 2020, and ending on or before December 31, 2020, even if the unemployed individual is not unemployed as a result of COVID-19.

Monthly transfers to state accounts authorized. Monthly transfers to the state accounts will represent 50% of the benefit disbursements for state and local governmental entities, certain nonprofit organizations, and federally recognized Indian tribes reported in the ETA 2112 report. Upon receipt of the report, the Department will certify to the Secretary of Treasury for the transfer of amounts from the Federal Unemployment Account to the account of the state in the unemployment trust fund.

Whether the state requires reimbursing employers to pay monthly or quarterly, the employer must pay their bill in full before reimbursement can be processed. Withdrawal from the state unemployment account for reimbursement to state and local governmental entities, certain nonprofit organizations, and federally recognized Indian tribes will be accomplished using the transaction “Return of State Unemployment Contributions (DI-111).

Certain benefits not covered . Payments of certain benefits which are 100% federally funded under the CARES Act will not be covered under Section 2103. These include Pandemic Unemployment Assistance (PUA) under Section 2102 of the CARES Act, Federal Pandemic Unemployment Assistance (FPUC) under Section 2104 of the CARES Act, and Pandemic Emergency Unemployment and Compensation (PEUC) under Section 2107 of the CARES Act. These programs do not result in a payment, in lieu of contributions, from employers, and, thus, payments under these programs are not covered under Section 2103 of the CARES Act.

EB also not covered. Federal sharing of extended benefits (EB) is available only if the provisions of the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA). Extended benefits are administered by the state in conformity with federal UC law. Section 204, EUCA, provides that states will be reimbursed for one-half the amount of sharable regular compensation or sharable extended compensation paid to claimants. The Families First Coronavirus Response Act (P.L. 116-127), in Division D of the Emergency Unemployment Insurance Stabilization and Access Act of 2020 (EUISAA), temporarily provides for 100% federal funding of sharable EB payments through December 31, 2020, for states that receive Allotment I and II of the emergency administrative grants, as discussed in UIPL No. 13-20. However, the UIPL reminds the states that Section 204(a)(3), EUCA, prohibits federal sharing for EB attributable to employment with state and local governments or federally recognized Indian tribes. This prohibition does not apply to EB attributable to employment with 501(c)(3) nonprofit organizations (UIPL 18-20, April 27, 2020).

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