More than half of the states have started to lift restrictions to re-open businesses or have similar plans to re-open in the next few weeks.
This mass re-opening, coupled with the fact that some employees at home are making more via unemployment benefits than their regular pay, presents a difficult challenge for many employers: How to successfully return workers back to the workplace?
Yesterday, the United States Department of Labor ("USDOL") reported that 3.169 million new unemployment claims were filed last week as the economy continues to experience the effects of the COVID-19 pandemic. The Coronavirus, Aid, Relief, and Economic Security Act ("CARES Act") expanded unemployment benefits by creating several provisions providing for unemployment insurance coverage and benefits to individuals impacted by COVID-19. The new benefits include federal Pandemic Unemployment Compensation ("PUC"). PUC is an additional $600 per week for up to four months through July 31, 2020 for those individuals that qualify for regular unemployment compensation. For example, in North Carolina, individuals eligible for regular state unemployment benefits ($350 max per week) could receive up to $950 per week ($350 max in state benefits + $600 in PUC).
The additional federal funding in unemployment has provided much needed income for recent unemployed individuals including those workers on partial unemployment due to a reduction in hours or rate of pay. But these expanded benefits have also produced unintended results as some individuals make more from collecting unemployment benefits than if they were to return to work. Furthering employees' resistance to return to work is the uncertainty surrounding employers' ability to provide safe workplaces to prevent or mitigate the transmission of COVID-19 among employees. Thus, employers are now asking what, if anything, can be done to incentivize workers to return to the workplace.
Prior to offering monetary incentives to employees, employers should consider the following two cost-effective strategies.
Strategy 1: Educate employees on unemployment fraud.
An individual can refuse work and still receive unemployment benefits under the CARES Act for certain reasons such as being ill or caring for a family member that is ill. However, there is no provision that allows an individual to refuse work because he or she is concerned about contracting COVID-19, or because an individual can earn more money by staying unemployed. In these situations, individuals resisting an employer's recall to work have no basis to refuse the available work. Additionally, an individual's refusal to return on such basis will likely result in the individual being ineligible to receive further unemployment benefits.
Most states, including North Carolina, require claimants to submit a weekly certification to the Division of Employment Security ("DES") to continue to receive unemployment compensation. The weekly certification usually asks the claimant if he or she is able and available to work. While we recently wrote how an Executive Order ("EO") from Governor Roy Cooper waived the state's work search requirements here, that EO did not waive the available to work requirements.
The USDOL also provided in its unemployment guidance that "individuals receiving regular unemployment compensation must act on any referral to suitable employment and must accept any offer of suitable employment. Barring unusual circumstances, a request that a furloughed employee return to his or her job very likely constitutes an offer of suitable employment that the employee must accept." A claimant cannot simultaneously answer "yes" to the available to work question and refuse his or her employer's valid recall to work to receive unemployment compensation without committing unemployment fraud.
The penalties for unemployment fraud include repayment of overpaid benefits, disqualification of unemployment compensation for one year, and civil and criminal penalties. Providing your employees with this information should encourage employees to return to the workplace to avoid the consequences of unemployment fraud.
Employers should anticipate that some employees still may refuse to return to work. In that instance, employers should:
- Confirm the individual's refusal to return in writing
- Inform the individual, in writing, of the consequences of unemployment fraud
- Inform the individual that the employer will report the availability of work and the employee's refusal of work to the unemployment office, and
- Treat the employee's refusal to return as a voluntary resignation and terminate the employment relationship (assuming the employee was furloughed or had hours reduced)
Employers who filed unemployment benefit claims on behalf of their employees (e.g., attached claims) are responsible for completing weekly DES certifications for such employees and should be able to report the availability of work in the weekly certification.
Strategy 2: Consider the viability of an intermittent work policy.
Some employers have made the decision to return their workers to the workplace but on a partial basis (e.g., reduced hours and/or pay rate). Even with the reduction in hours and/or pay, some employees will make too much to qualify for regular unemployment compensation, and therefore be disqualified from PUC.
In North Carolina, however, an employee working reduced hours may, in some circumstances, still be eligible for unemployment benefits at a reduced weekly benefit amount. For example, a North Carolina claimant can earn up to 20% of his or her weekly benefit amount without it counting against the weekly benefit, but earnings over 20% are deducted from the weekly benefit amount. Since the maximum weekly benefit amount is $350 per week in North Carolina, this means that claimants who earn $420 or more in earnings on a weekly basis are ineligible to receive unemployment compensation.
Implementing an intermittent work policy such as one week "on" and one week "off" for certain employee groups will allow employees to earn normal compensation for the weeks that they work while still typically allowing employees to qualify for unemployment compensation during furloughed weeks. North Carolina employers that want to ensure that their employees may receive regular compensation simultaneously with PUC should consider the operation of PUC with existing state laws.
In order for an individual to be entitled to receive the additional $600 in PUC, the individual must be entitled under the state law to receive regular unemployment compensation. An individual is not entitled to receive PUC for a week in which the individual is ineligible for regular unemployment compensation or the underlying benefit from another federal program. This means that "[i]f the individual is eligible to receive at least $1 of underlying benefits for the claimed week, the claimant will receive the full $600."
However, employers should also consider that in North Carolina, if the weekly benefit amount is calculated as an amount that is less than $15, the individual is not eligible for benefits under existing state law. Thus, North Carolina employers who recall employees back to the workplace on a partial basis should not pay such employees in excess of $405 on a weekly basis to allow the employees to maintain their eligibility to receive regular state unemployment benefits and the additional $600 in PUC.
The above two strategies do not represent the only options for employers to incentivize workers to return to the workplace, but do offer a more cost-effective approach in lieu of providing employees with bonus payments.
© 2023 Ward and Smith, P.A. For further information regarding the issues described above, please contact or .
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.
We are your established legal network with offices in Asheville, Greenville, New Bern, Raleigh, and Wilmington, NC.