Tag: unemployment insurance

October 29, 2023

New York Updates Unemployment Notice Requirement

On September 14, 2023, New York Governor Kathy Hochul signed amendments to Section 590 of the New York Labor Law. That statute will now require employers to provide specific notifications to employees regarding their potential eligibility for unemployment benefits. While the new unemployment notice requirements aim to enhance transparency for employees, they also underscore the importance for businesses to stay updated and adapt to the evolving regulatory landscape to avoid violations and penalties through the Unemployment Insurance process.

What’s New?

Beginning November 13, 2023, the law will require every employer who is obligated to contribute to the unemployment insurance system to notify their employees about their right to apply for unemployment benefits, when applicable.

Although New York employers have already been expected to provide employees with a Record of Employment upon separation, the law will now require notification in more situations that don’t necessarily involve termination of employment.

When Is the Unemployment Notice Required?

Employers must provide this unemployment notice:

At the time of each permanent or indefinite separation from employment.
During a reduction in hours.
During a temporary separation.
For any other interruption of continued employment resulting in total or partial unemployment.

Unfortunately, the above terms are not specifically defined in the amended statute.

What Should the Unemployment Notice Include?

The required notice must be in writing and should be on a form either furnished or approved by the New York Department of Labor.

The notice must contain:

Employer’s Details: This includes the employer’s name and registration number.
Address for Communication: The notice should specify the address of the employer to which any request for remuneration and employment information regarding the employee should be directed.
Additional Information: Any other information as required by the Department of Labor should also be included.

The DOL has updated the Record of Notice form in response to this law. It is available here. Unfortunately, to date, the DOL has not provided further clarification of the circumstances where notice must be provided short of permanent employment separation.

Implications for Employers

This new unemployment notice provision emphasizes the state’s commitment to ensuring that employees are well-informed about their rights. For employers, it means:

Being Proactive: Employers should be ready with the required forms and processes in place by November 13, 2023.
Training HR Teams: HR teams should be trained to understand the nuances of the new unemployment notice provision and ensure compliance.
Avoiding Penalties: Non-compliance could lead to negative consequences regarding unemployment claims. It’s crucial for employers to adhere to these new unemployment notice requirements diligently.

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April 16, 2020

Enhanced Unemployment Offers Employers A New Option During Coronavirus Pandemic

Here’s a little secret. Most employment lawyers historically didn’t have to pay much attention to unemployment laws before COVID-19 came along. Employees would leave jobs and either get unemployment benefits or not, for various reasons. But new enhanced unemployment benefits under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act have suddenly created many new legal complexities surrounding the unemployment system. Solely in the vein of making a horrible situation slightly better, the CARES Act has produced some new approaches to layoffs and work reduction that might pose unique benefits to both workers and their employees.

Another secret. Here are the main takehomes from all the words below:

People on unemployment get an extra $600/week until the end of July 2020.
The extra money doesn’t come at the expense of employers.
New York’s Shared Work Program is a much more attractive option than it ever has been before.

If any of these points seem interesting, please keep reading.

New York State Unemployment

Even before the CARES Act came along, unemployment has long been a fairly complicated system. But most of that complication came in the back end. It involved the details of calculating who has worked enough to receive unemployment benefits, how much they earn, and how much each employer has to pay to enable workers to receive these benefits. Luckily, the government usually handles most of that complexity–in essence, they send workers checks and send employers the bill to cover the benefits.

Although the federal government plays a role in unemployment, it’s usually in the background. Processing unemployment claims and providing compensation to workers out of a job usually falls to the states. Thus, most employers in New York, for example, make regular contributions to the state unemployment insurance system. These contributions vary depending on how many workers receive benefits credited to a particular company’s account. In other words, companies with more employees (usually former employees) who receive benefits typically contribute more to the system. (Many non-profit organizations have the option of essentially being self-insured for unemployment. If they choose to do so, these organizations can refrain from paying unemployment “taxes” and instead reimburse the State directly for the amount of any benefits received by their employees.)

New York workers who become eligible for unemployment must first file a claim with the State. Then they have to re-certify on a weekly basis. The re-certification process serves to confirm that an individual is still out of work, but is available to work and actively looking for a new job. As long as that remains true, a claimant can normally continue to receive unemployment benefits for up to 26 weeks out of a year. To keep things simple, the amount of benefits is usually equal to half of what the person made while working, up to a max of $504 per week.

CARES Act Enhanced Unemployment

Among its numerous stimulus measures, the CARES Act includes many provisions that create temporary enhanced unemployment benefits. This article isn’t going to address all of them in detail. For example, the CARES Act enables self-employed individuals to receive unemployment benefits more easily than they normally could. It also allows workers to receive unemployment beyond the standard 26 weeks in some situations. These and other enhanced unemployment benefits may be relevant to your business or its employees. But, for now, we’re going to primarily focus on other aspects of the CARES Act unemployment enhancements that will likely have a broader and more immediate impact on how companies choose to manage their workforce during the coronavirus crises.

$600 “Federal Pandemic Unemployment Compensation”

Perhaps the most publicized aspect of the CARES Act unemployment measures gives virtually anyone receiving unemployment benefits an additional $600 per week. This extra benefit only lasts until July 31, 2020 (technically, the week of unemployment ending before that date). But it’s still a huge expansion of standard unemployment benefits.

Remember, the NYS max unemployment benefit is normally $504 per week. That’s what someone who normally makes $1,008 or more per week would get. Now they’ll receive $1,104. Yes, even if they made less than before!

The U.S. Department of Labor has issued guidance clarifying that people receiving unemployment will get the $600 extra per week as long as they normally qualify for at least $1 of state unemployment benefits. So, for example, someone who only made $400 per week when working could now get $800 on unemployment ($200 state unemployment benefits plus the $600 federal addition).

Employees will even receive the $600 bump if they’re only receiving partial unemployment benefits. In New York, workers whose pay is cut resulting in them working less than four days in a week and earning under $504 may qualify for partial unemployment. Though usually only a small benefit of a couple hundred dollars, the extra $600, plus whatever they’re still earning from working on a reduced schedule, will often result in such employees earning way more than they regularly would.

Though they might rather be working as normal, this enhancement is at least a meaningful upgrade for individuals on unemployment.

There’s also good news for employers (beyond the peace of mind in knowing their out-of-work employees are getting more money). The federal government is paying for this extra $600/week. Under existing New York law, this means it won’t count against employers’ unemployment experience rating. But that’s only the extra $600. The standard NYS portion will still be charged to the employer as normal.

Federal Funding of Shared Work Program

New York has had a “Shared Work Program” for decades. This program allows employers to establish a plan for reducing employee hours and compensation that will also enable workers to receive some unemployment to supplement the lower wages.

Employers must apply to the State for approval under this program. To qualify, a Shared Work Plan must:

Reduce work hours and corresponding wages 20–60%
Apply only to employees who normally work no more than 40 hours per week
Not reduce or eliminate fringe benefits (unless also doing so for the entire workforce)
Cover a period of up to 53 weeks
Replace a layoff of an equal percentage of employees

For more, read New York’s Shared Work Program Provides a Layoff Alternative

Some companies with seasonal fluctuations in their business routinely use this program. The primary benefit for employers is that they keep their workforce intact and in touch with the company. Another feature of the program is that employees don’t have to look for alternative work despite receiving partial unemployment benefits. The idea is for them to continue working for their current employer.

Usually, the State charges the employer’s account for the unemployment benefits employees receive under the Shared Work Program. However, the CARES Act creates full federal funding for the program through the end of 2020. This funding makes the program very attractive for employers who have less work to be done, need to save money, and don’t want to lose their employees during the COVID-19 crisis.

Note: The CARES Act does not provide federal reimbursement for Shared Work benefits paid to temporary, seasonal, or intermittent employees even though such workers can participate in a Shared Work plan under New York law.

Putting It All Together

To show the value of these enhanced unemployment provisions, let’s look at an example.

Company X

Suppose a company with 50 employees has 10 management employees who still need to and are able to work full-time right now. The other 40 are hourly employees who all make $20 per hour (not realistic, but it keeps the math simple). These employees all normally work a 40-hour week. The company qualifies as an essential business, so it can continue to operate. But customer demand is down, and management wants to keep employees safe through social distancing and remote work as much as possible. Consequently, there is much less work for these 40 employees to perform.

Let’s say the company decides it only has about 800 hours of work per week for the hourly employees. That’s half of the standard 1600 hours (40 employees x 40 hours/week). It could lay off 20 of the employees and let the other 20 work full-time, or it could let everyone work 20 hours instead of 40. Assume the company expects business to pick up later this year and will again need 40 hourly employees.

If the company either lays off half of the employees or reduces everyone’s hours, the affected employees can apply for unemployment. They will all get the $600/week enhanced unemployment benefit. The employer won’t have to pay for that. But it will have to pay for the standard NYS benefits the employee will also receive. That is, those benefits will affect the company’s unemployment insurance experience rating and the UI taxes it pays.

Shared Work Program Option

But, under the Shared Work Program, the federal government will pay all of the unemployment with no charge to the employer. Here’s what that would look like:

Each of the 40 employees will work 20 hours
Employee benefits remain intact
The company pays each worker $400/week (20 hours x $20/hour)
Each employee receives $200 in standard NYS unemployment for up to 26 weeks (subject to some individual circumstances)
Each employee also receives $600/week in enhanced unemployment until the end of July 2020

Through July, each employee will “earn” a total of $1,200 per week for working only 20 hours! That’s $60/hour, or triple their regular hourly rate!

At the same time, the company is still only paying $20/hour and saving $200/week per employee, or $8,000 for the 40 employees.

Can Your Company Take Advantage of This Situation?

The scenario above is just one hypothetical example. The math will vary for each company looking at options to reduce labor costs during the COVID-19 pandemic. But the Shared Work Program does offer flexibility. An employer can divide up its workforce in various ways to include/exclude different employees. You can modify the hour/compensation reduction between 20 and 60% to suit your business needs.

There may also be some logistical hassles. You do have to apply for and receive approval to participate in a Shared Work Program. But it seems New York is encouraging employers to take advantage of this option and may be able to process applications reasonably quickly.

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October 18, 2018

Severance Pay Affects New York Unemployment Benefits

Since a 2014 reform to New York State’s Unemployment Insurance System, employees are generally not eligible to receive both severance pay and unemployment insurance at the same time. However, there are exceptions and nuances to this rule. As a result, employers sometimes have options that can affect their former employees’ receipt of New York unemployment benefits.

[You might also want to review this article on “Contesting New York Unemployment Claims”.]

New York Unemployment Benefits

In New York, employees must be completely unemployed and actively seeking work to be eligible for unemployment benefits. Most unemployed individuals with sufficient work history will be eligible for benefits. Employees who resigned or engaged in misconduct might not receive benefits.

Until several years ago, severance pay did not change employees’ New York unemployment benefits. Now, however, it often will.

What is Severance Pay?

New York’s unemployment insurance law defines severance pay as “payments made by an employer to an employee due to separation from employment.” Severance pay generally does not include payments regarding retirement, health insurance, accrued leave, or unemployment benefits.

The law recognizes that severance pay can be paid in several payments or one lump sum. And now the timing of the payment(s) matters for unemployment purposes.

Why Timing Matters

Whether severance pay affects unemployment benefits can depend on when the employer makes the payments.

If an employee receives severance pay within 30 days of his or her last day of employment, the severance may offset the unemployment benefits. In that scenario, the employee will not receive unemployment if the weekly severance payments (or pro rata portion of a lump-sum payment) are higher than the maximum weekly unemployment benefit rate. Once the severance payments have ended, the employee may be eligible to receive unemployment benefits (assuming they meet standard eligibility requirements).

On the other hand, if the employee does not begin receiving severance pay until more than 30 days have passed since their last day of employment, they can immediately collect unemployment. In this situation, the severance pay will not affect New York unemployment benefits at all.

(The “last day of employment” is the last day an employee was actually working or was on paid leave.)

Keep This in Mind

Eligibility to receive New York unemployment benefits is often an important issue for departing employees. Employers should carefully consider unemployment issues in developing severance packages.

When employers have options in structuring the severance payout, they should factor in the impact on unemployment benefits. The decisions involved can have meaningful financial implications for both the employer’s business and the former employee. The “right” choice will likely vary in different situations.