As they receive Paycheck Protection Program loans, companies are increasingly concerned the people they laid off aren’t going to come back because they can earn more money on unemployment, thanks to an extra $600 added to their regular benefits.
The bonus benefits were part of the federal Coronavirus Aid, Relief and Economic Security (CARES) Act enacted in March.
During NJBIA’s Employment and Labor Law Policy Committee this past week, the idea was raised to create a mechanism to alert the New Jersey Department of Labor (DOL), which processes unemployment applications, that a filer has been offered employment and is therefore no longer eligible.
Under normal circumstances, unemployment insurance recipients have to take the work that is offered them or they lose their unemployment insurance benefits.But in the coronavirus pandemic, the issue is not that simple.
On the surface, the idea may make sense. DOL is overwhelmed with a 1,000% increase in applications due to the unprecedented business closings aimed at stopping the spread of the coronavirus. In addition to a volume of claims that was unimaginable even a couple of months ago, DOL offices are closed and employees are working remotely, much the same way many businesses are. While the department is processing claims at a rapid rate, the sheer volume has many applicants waiting for answers.
Furthermore, the Paycheck Protection Program (PPP) is designed to get or keep people off of unemployment by giving businesses the means to meet payroll even if they’re not open and people aren’t working. If they use the loans for payroll and meet all of the criteria, businesses will see part if not all of their loan forgiven.
John Sarno of the Employer Association of New Jersey said that simply being offered work though is not enough to disqualify someone from benefits.
“Many of the people who are not reporting back believe that their workplaces are unsafe, and if there’s a rational basis for that, then they’re going to get unemployment,” Sarno said. The CARES Act spells out the reasons that someone can get unemployment benefits, and they include a rational fear of contracting the virus at work when the employer is not taking proper precautions.
While some people may see it as being in their economic interest not to come back to work, many employees have legitimate concerns, Sarno said. Those with preexisting medical conditions or older workers who are more vulnerable to the coronavirus, for instance, will likely meet the criteria for staying on unemployment.