A Presidential Memorandum issued on August 8, 2020, authorizes a “Lost Wages Assistance” (LWA) program, to supplement unemployment insurance (UI) benefits, due to the continued need for financial security brought on by the Covid-19 pandemic. The Memorandum can be found here.
The $600 weekly Federal Pandemic Unemployment Compensation (FPUC) supplement to UI benefits expired at the end of July, and Congress has yet to come to an agreement on a new economic stimulus bill. While not an exact replacement of FPUC, the LWA program is intended to extend financial relief to unemployed workers. Key elements of the LWA program are as follows:
- LWA funding will come from FEMA, up to $44B, via their Disaster Relief Fund (DRF)
- FEMA has a 30-day application window for states to apply for an LWA grant
- States must apply for an LWA grant no later than September 10, 2020
- The LWA program will be administered by state UI agencies
- LWA provides for a maximum additional payment of $400 per week
- $300 coming from the “federal contribution” via the FEMA Disaster Relief Fund
- $100 would need to be funded by the states – from existing sources, such as the CARES Act Coronavirus Relief Fund (CRF) or some other state funds; UI Trust Fund monies cannot be used
- Eligible persons will receive weekly LWA payments, retroactive to the week of unemployment ending August 1, 2020
As noted above, participation in the LWA program requires each state to file an application with FEMA and receive approval. Many are still deciding whether or not to participate, but at the time of this publication, 9 states have applied and been approved: AZ, CO, IA, LA, MO, MT, NM, OK, and UT. The LWA amount payable will be either $300 or $400, depending on whether a state elects to implement the $100 supplement to the $300 federally funded portion. Employers Edge continues to monitor developments of the LWA program. State – Specific information can be found in our UI Guide located at https://www.employersedge.com/blog/ We encourage you to bookmark this site and check back frequently for updates.
There are some distinct differences between the now expired FPUC program and the new LWA program. Under FPUC, any person receiving UI benefits also received the additional $600 weekly. To receive LWA payments, a claimant must self-certify that they have lost employment as a result of the Covid-19 pandemic. Another noticeable difference is that once a state is approved for LWA, a claimant must be found eligible for $100 in regular unemployment benefits or one of the following UI programs, in order to receive the LWA supplement.
- Unemployment Compensation for Federal Employees (UCFE)
- Unemployment Compensation for Ex-Service Members (UCX)
- Pandemic Emergency Unemployment Compensation (PEUC)
- Pandemic Unemployment Assistance (PUA)
- Extended Benefits (EB)
- Short-Time Compensation (STC)
- Trade Readjustment Allowances (TRA )
- Payments under the Self-Employment Assistance (SEA) program
LWA is payable to eligible claimants beginning with weeks of unemployment ending on or after August 1, 2020, through weeks of unemployment ending no later than December 27, 2020. The LWA program may terminate earlier than December 27, 2020, if: 1) FEMA expends the $44B; or 2) The FEMA Disaster Relief Fund balance reaches a floor of $25B; or 3) Congress agrees on and enacts a new economic stimulus package to include a similar UI benefit supplement.
Experts believe if all states were to participate, given current national unemployment claims volumes, LWA payments would be exhausted in roughly 5 to 6 weeks. Once the federal funding is depleted, states are encouraged, but not required to continue payment of the $300 federal portion of the benefits. Experts believe this is unlikely, given that most states have overall diminished tax revenues, brought on by the pandemic, meaning state budgets could not absorb those costs.
Because the LWA program is federally funded through FEMA, there is no unemployment cost impact to merit-rated or reimbursing employers.