COVID-19: Unemployment and Underemployment Claims in California

COVID-19: Unemployment and Underemployment Claims in California

Apr 21, 2020 By Robert M. Caietti In Contested Trusts and Estates

Many California employers are hoping to make layoffs and reductions in force methods of last resort, instead opting first for furloughs, pay cuts, or changes in status from full-time to part-time for their employees. Employees who are subject to such reductions may still be eligible for partial claim benefits from the EDD and CARES Act (stimulus) Pandemic Unemployment Act benefits.

Unemployment and Underemployment Claims

In California, the maximum weekly benefit amount for unemployment insurance (UI) is $450. The weekly amount is calculated by looking at the highest-earning quarter in an applicant’s base period and dividing the total wages from that quarter by 26. If the resulting number is $450 or greater, the applicant receives the maximum benefit amount. Anything less, the applicant receives that amount per week.

When an employee experiences a reduction in weekly wages earned, perhaps, for example, a furlough resulting in the employee’s regularly scheduled weekly hours decreasing from 40 to 32, the employee can apply for an underemployment or partial unemployment insurance claim.

Partial claims are calculated by first finding the UI weekly benefit amount if an employee was totally unemployed. In California, the benefit amount can range from $40 to $450. Then, the employee’s new weekly amount must be calculated. The new weekly amount is what the partial claim is based on, so it can change if employees work more hours or fewer hours in a given week.

The EDD subtracts 75% of the new weekly amount from the maximum benefit to find the partial claim amount. A pay reduction itself does not guarantee that an employee will receive partial claim benefits. It is the amount of the pay reduction that is critical in determining eligibility. For example, if an applicant’s maximum benefit is $450 and a pay cut or reduction in work hours results in earning only $320 per week, the partial claim amount is: 450-(320 x 75%) = 210. The employee would receive $210 as the partial claim benefit amount.

This is an approximation and will differ from employee to employee, but it is a little-known unemployment insurance benefit that could provide critical benefits to employees facing pay cuts or changes in status during this time.

Additionally, the CARES Act provides for an additional $600 week in federal benefits, routed through and distributed by state unemployment agencies. This means eligible employees must apply for unemployment insurance claims through the California EDD in order to receive the federal funds. The $600 additional weekly benefit is added to any state benefit an employee receives, as long as the employee is eligible to receive at least $1 in state benefits. Thus, an employee in California could receive $640 to $1,050 per week in unemployment benefits after the CARES Act funds are distributed. 

This illustrates the importance of partial unemployment claims – employees who experience partial unemployment could be eligible for $600 in federal stimulus funds, even if not totally unemployed. 

Pandemic Unemployment Assistance

As part of the CARES Act, the Pandemic Unemployment Assistance (PUA) program helps Californians who may not be eligible for regular state UI benefits and are unemployed or underemployed for COVID-19 related reasons. Business owners, self-employed individuals, independent contractors, and applicants with limited work histories are the main focus of PUA in California.

PUA offers up to 39 weeks of UI benefits starting with weeks of unemployment beginning February 2, 2020, through the week ending December 26, 2020, depending on when an applicant became impacted by the pandemic.

Applicants are eligible for weekly PUA benefit amounts as well as the supplemental $600 weekly benefit allotted through the CARES Act Pandemic Additional Compensation program described above. The $600 supplemental weekly benefit is available for unemployment starting the week of March 29, 2020 through July 25, 2020.

PUA has its own eligibility criteria, including:

  • You have been diagnosed with COVID-19 or are experiencing symptoms of COVID-19 and are seeking a medical diagnosis.
  • You are unable to work because a health care provider advised you to self-quarantine due to concerns related to COVID-19. 
  • A member of your household has been diagnosed with COVID-19.
  • You are providing care for a family member or a member of your household who has been diagnosed with COVID-19. 
  • A child or other person in the household for whom you have primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 and the school or facility care is required for you to work.
  • You became the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19.
  • You have to quit your job as a direct result of COVID-19. 
  • Your place of employment is closed as a direct result of COVID-19.
  • You were scheduled to start a job that is now unavailable as a direct result of the COVID-19 public health emergency.
  • You are unable to reach the place of employment as a direct result of the COVID-19 public health emergency.
  • If you work as an independent contractor with reportable income, you may also qualify for PUA benefits if you are unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited your ability to continue performing your customary work activities, and has thereby forced you to stop working.

The California EDD will start accepting online applications for PUA benefits on April 28, 2020. Applicants can be eligible for benefits dating back to February 2, 2020, depending on the last day of work and PUA effective date. Initial benefit payments are broken down into three time periods:

  • $167 per week of unemployment due to a COVID-19 related reason from February 2, 2020 through March 28, 2020
  • $167 plus $600 per week of unemployment due to a COVID-19 related reason from March 29, 2020 to July 25, 2020
  • $167 per week of unemployment due to a COVID-19 related reason, up to a total of 39 weeks

Unemployment and underemployment benefits provided by new federal legislation are distributed through state unemployment insurance agencies. Employees and employers should be aware of the unemployment and underemployment insurance benefits and options as businesses and workers navigate these unprecedented times. Additional information can be found at edd.ca.gov and employees should be encouraged to regularly visit the EDD’s COVID-19-specific pages for assistance and information. New resources and guidance are constantly added as the new benefits are implemented.

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