This article addresses questions employers are asking about unemployment insurance. (Updated 4-3-2020)

Q: Are employees eligible for unemployment insurance if they cannot work due to office closure, illness or quarantine?

A: Individuals are generally eligible to receive unemployment insurance benefits if they are out of work through no fault of their own, available for work, and actively seeking work. Additionally, the U.S. Department of Labor issued Unemployment Insurance Program Letter 10-20 on March 12, 2020 – Unemployment Compensation (UC) for Individuals Affected by the Coronavirus Disease 2019 (COVID-19).

In response to a question about individuals under quarantine, it says in part: "Federal law would permit a state to treat the separation for the period of the quarantine as a temporary layoff." So, if individuals meet all the other eligibility requirements the state would be permitted to determine the individuals eligible for unemployment benefits.

Q: Can hourly employees, not being paid during closures, apply for unemployment benefits?

A: Anyone can apply for unemployment benefits. Individuals with sufficient prior wages who are out of work through no fault of their own, available for work, and actively seeking work are generally eligible to receive benefits. Whether the individuals were compensated on an hourly or salary basis does not matter.

Q: Can employees for whom we reduce hours to 20 hours a week apply for unemployment or other aid to make up the other 20 hours?

A: The U.S. Department of Labor issued Unemployment Insurance Program Letter 10-20 on March 12, 2020 – Unemployment Compensation (UC) for Individuals Affected by the Coronavirus Disease 2019 (COVID-19). It states in part that "the Short-Time Compensation (STC) program, also known as worksharing, helps employers avert layoffs. The program allows employers with a state-approved STC plan to reduce the hours of the employees in lieu of layoffs, while permitting these employees to receive payment for partial unemployment." Additionally, the Emergency Unemployment Insurance Stabilization and Access Act of 2020 directs the Secretary of Labor to assist states in establishing, implementing, and improving employers' awareness of STC programs. There are 28 states that have enacted or amended STC laws. This is a link to the U.S. Department of Labor website that lists the states with STC programs: https://stc.workforcegps.org/resources/2016/03/15/00/54/STC_State_Websites. Employers need to contact the applicable state to implement a STC plan.

Q: Can employees of a non-profit organization receive unemployment benefits?

A: The tax filing status of the employer is not a relevant factor in determining an individual's eligibility for unemployment insurance benefits. Employees who meet the state's requirements for monetary eligibility and are out of work through no fault of their own, available for work, and actively seeking work are generally eligible to receive benefits. Non-profit employers that elect the reimbursement method of coverage are required to reimburse the state for any unemployment benefits paid to former laid-off workers that are attributable to the employer.

Q: If a business closes temporarily, can the employees file for unemployment? If so, what is the period of time the business needs to be closed?

A: Yes, temporary business closures are a typical situation for unemployment insurance to step in and provide benefits to eligible individuals. States generally determine eligibility to individuals weekly, and any wages paid during that week would reduce benefit eligibility.

Q: Are employees eligible for unemployment insurance if they have a disability?

A: Assuming the individual was previously employed while having the disability, it would generally not be a factor in determining unemployment eligibility. Under existing state eligibility requirements, individuals must be available for suitable work, which would refer to the work the individual previously performed.

Learn more

Launch this webcast anytime to get more information: Protecting Your Workforce and Understanding Policies as Your Organization Responds to COVID-19 (Part 1)

Helpful information can be found here: ADP Employer Preparedness Toolkit — Coronavirus Disease (COVID-19)

The information provided by ADP is for general informational purposes only and is not legal, accounting or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation. Any information provided here is by nature subject to revision and may not be the most current information available on the subject matter discussed.

Tags: Payroll Taxes Unemployment Tax Salary and Wages Talent Small Business HR Articles Finance People Management and Growth Midsize Business Large Business