We are receiving lots of questions about unemployment benefits during this unprecedented time. Here is a quick FAQ on these topics:
- How does the federal unemployment benefit work? In addition to any state benefits your former employees are entitled to, they will also be eligible for $600/week pursuant to the federal CARES Act. TWC will automatically add that amount to any benefit check. In other words, claimants do not need to apply for the federal supplement separately. This entitlement went into effect the week ending April 4, and claimants will be paid this amount retroactively.
- How much will my former employee be entitled to? The TWC benefit depends on the laid off employee’s income. Roughly, you take annualized salary and divide by 100 and then round up to the nearest dollar, except this is done on a quarterly basis (so really you are dividing quarterly income by 25). If an employee had variable compensation, you go back roughly a year and use the quarter with the highest income. The maximum weekly TWC benefit is $521, so, for example, a laid off employee with an annual income of $60,000 would be entitled to $1,121/week (state benefits of $521 + federal benefits of $600).
- Have any requirements been waived by TWC for claimants? Yes, proof of search and the waiting week period have been waived by TWC.
- How about chargebacks? You will still receive a chargeback for the TWC amount, but you will not be charged back the federal supplement.
- What about employees who have had their pay or hours cut, are they entitled to benefits? Potentially. First, if you cut pay or benefits by 20% or more, an employee is entitled to quit and receive benefits. Normally, an employee who resigns their employment is not entitled to unemployment benefits, but here a resignation would be treated as a constructive discharge thereby entitling them to benefits. Depending on the employee’s wages, they actually might be better off financially by quitting and receiving benefits than to accept the reduction in hours. Second, if hours are reduced between 10%-40%, you may be eligible to participate in the TWC’s shared work program. That would require to submit a plan to the TWC and if accepted they would supplement your employees’ wages.
- My employee is collecting more in unemployment than he or she gets paid for working. How do I get him/her to come back to work? First, this will only occur for employees who made approximately $58,000 or less annually. Employees who made more than that amount will not receive unemployment benefits that exceed their previously wages or salary. For employees who make less than that amount, however, options are limited. We recommend you make an unqualified offer to return and set a fixed return date. You may want to communicate that if they fail to show by this date they will be ineligible for future employment. It may also make sense to pay a show-up bonus and weekly bonuses thereafter in order to reduce the discrepancy between what they would be making vs. their unemployment benefits. If they still fail to return, the TWC wants you to report that to it, and that may be something you communicate to your employee as well.
- If he/she declines my request to get back to work, can I tell TWC about that? If so, how? Yes, you should report it to TWC’s fraud division. Email firstname.lastname@example.org or call 1-800-252-3642.
Stay safe and keep the course. And please let us know if we can help.