On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES), and the legislation was signed into law later that day by President Trump. With approximately $2 trillion of aid and stimulus funding, the CARES Act is the single largest economic stimulus package in American history. The legislation includes a wide range of measures (both direct financial relief and procedural and policy changes) intended to blunt the economic impact of the ongoing COVID-19 pandemic and to help families and individuals, businesses, and health care organizations, and civic and community leaders receive the funding and support they need during the challenging weeks and months ahead.
For employers facing uncertain times and a dire economic outlook, one of the most impactful pieces of the CARES Act is the significant expansion of unemployment benefits. The latest data shows a dramatic increase in unemployment filings in Michigan—mirroring a nationwide trend. A record 6.6 million Americans filed for unemployment last week.
For business owners and operators in the State of Michigan, understanding what those expanded benefits entail, who is eligible to receive them, and how this new information should inform their decision-making is critically important to protecting the health and wellbeing of your team and your business.
Evolving Benefits Landscape
Prior to the passage of the CARES Act, Gov. Whitmer had recently signed an executive order to expand eligibility for unemployment benefits in the State of Michigan during the COVID-19 pandemic. The order, which went into effect on March 16, makes it clear that unemployment benefits now extend not only to those employees who lose their employment due to a lack of work, a business closure, furlough, permanent layoff, or termination, but also to COVID-19-related issues.
Specifically, the Michigan order expanded benefits eligibility to include employees who leave work or are laid off because of:
- Family care responsibilities due to a government directive (such as school closure);
- The need for self-isolation or self-quarantine in response to elevated risk from COVID-19 due to being immunocompromised;
- Displaying symptoms of COVID-19; and
- Coming in contact with someone with a confirmed COVID-19 diagnosis in the last 14 days.
CARES Act Benefits Expansion
Michigan’s already revised unemployment benefits became even more expansive with the passage of the CARES Act. After the CARES Act was passed, the State of Michigan announced it had formally entered into an agreement with the U.S. Department of Labor (DOL) to implement enhanced unemployment benefits for Michigan workers. Those benefits include an extended period of coverage, additional weekly financial support, and broader eligibility.
Highlights of Michigan’s revised unemployment benefits under the CARES Act include:
- All unemployed (including furloughed) individuals will now be eligible for an additional $600 per week on top of the state unemployment amount (for a total maximum payment of $962 per week) for up to 4 months. Individuals who have already applied for benefits do not have to re-apply in order to receive this benefit.
- The duration of State unemployment benefits is increased to 39 weeks (the added $600 is capped at 4 months).
- Unemployment benefits have been expanded to include many workers who are not customarily entitled to benefits, such as those who are self-employed and independent contractors.
In other words, the umbrella of unemployment coverage now available in Michigan has grown in important ways. Not only are benefits now available for a longer period of time, they include more generous financial payouts and cover a significantly expanded range of previously ineligible workers, including delivery drivers, gig workers, independent contractors, and employees of some small businesses who were not previously covered.
Implications for Employers
In light of these new unemployment benefits realities, what do employers need to know?
First, employers will be gratified to learn these expanded benefits will in no way increase their existing premiums.
Second, it is important to note an employee who is receiving paid sick leave under either the Family Medical Leave Act (FMLA) or the employer’s paid time off policy are not eligible for unemployment benefits while receiving pay.
Finally, and perhaps most importantly, employers should recognize and consider the fact that these enhanced benefits may now make it possible for workers to receive close to or — in some cases — perhaps even more financial support from unemployment than they did while working. That alone makes the current circumstances surrounding employment decisions very different from previous economic recessions and other past challenges. Struggling or cash-strapped business owners could find themselves in a situation where laying off an employee is actually more generous than cutting hours or reducing salary. Employers should take this new paradigm into careful consideration when making both individual and collective employment decisions, as well as when deciding about the various loans available under the CARES Act.
Both the CARES Act and the various Michigan statutes governing unemployment and compensation for employers and employees alike are enormously complex. Individual circumstances, eligibility considerations, and the economic calculus can vary considerably from one company — and even one employee — to the next. With that in mind, I urge all business owners to take the time to read through the statute themselves, and, as always, to consult with trusted advisors and experienced legal counsel before making any significant decisions.
James Parks is a partner and attorney in Southfield-based Jaffe Raitt Heuer and Weiss’s litigation and dispute resolution, employment and labor, and executive compensation and employee benefits practice groups.