May 27, 2020

So, Your Employee Wants to Stay on Unemployment.

Beautiful tired girl sitting at the desk in the office and looking at the camera; employee would rather collect unemployment than work

The COVID-19 crisis has stretched on for more than two months and entrepreneurs across America are now looking to reopen their businesses — and the economy, in general.

Of course, the first piece of that equation involves recalling your employees who have been temporarily furloughed or laid off. And, since one portion of the CARES Act included an additional $600 per week to anyone collecting unemployment benefits, one common question that we’re hearing in our HR Solution Center is:

 

“What if my employees refuse to come back to work because they want to keep collecting unemployment?”

Usually, this question seems to be based on a misunderstanding of how unemployment benefits work (watch CEDR’s HR Solution Center Manager Grace Godlasky give an overview of unemployment benefits in this 7-minute video).

Generally speaking, if your employees refuse work in favor of collecting unemployment benefits, they will likely not be eligible for those benefits. Here’s why:

 

Unemployment is meant for people who can’t work through no fault of their own.

Unemployment benefits may be available as a temporary replacement for work when you have lost employment or had your hours reduced at no fault of your own. They are generally not provided when viable work is available but refused. 

Refusing to work, choosing to take a leave of absence, or resigning from employment when work is available could negatively impact an individual’s ability to receive unemployment benefits. Further, patently refusing to come to work because you would rather receive unemployment benefits can be interpreted as a choice to resign from at-will employment. 

 

A condition of receiving unemployment requires being ready and able to work. 

If you offer work and your employees do not accept that work, you are legally obligated to accurately report these instances on the Unemployment Insurance (UI) claims you receive from your state on behalf of staff members. 

Likewise, your employees are also legally obligated to accurately report all information requested of them in their application.

If one or both of you report that you offered an employee hours but they elected not to work, there’s a chance that this will negatively affect their UI eligibility.

 

Unemployment is often available to individuals who are underemployed.

Reopening does not necessarily mean returning immediately to full capacity. In fact, getting back to “normal” may take some time, and it will likely be further delayed by any economic downturn we face as a result of this crisis even after social distancing guidelines are relaxed.

That said, having your employees come back to work does not necessarily equate to having them kicked off of unemployment benefits. Your employees will simply need to report any income they do receive while they are receiving UI benefits. That income may affect the total payout of that benefit but, so long as your team is not restored to its full workload right off the bat, it may not eliminate it entirely. Your employees may actually be able to continue collecting UI despite working available hours at your business.

Some states even have Work Share programs in place specifically to allow employees to collect partial unemployment when they are forced to work reduced hours. States with Work Share Programs include Arizona, Arkansas, California, Colorado, Connecticut, Florida, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Washington, and Wisconsin.

You can find more information on your state’s unemployment process under the “State Specific Resources” section of our Employer Coronavirus Resource Page.

 

Related Reading: How to Reopen Your Business After Coronavirus.

 

Unemployment expansion under the CARES Act has its limits.

We should mention here that the guidance in this post is based on the premise that a business can legally reopen and doing so does not go against local orders or applicable industry guidance. 

Employees are eligible for UI under the CARES Act if they are “unable to reach the job as a direct result of the COVID-19 public health emergency,” which likely includes being forbidden from going to the office by official order. 

That said, along with the $600 weekly “supercharge” to unemployment benefits, the federal government also released guidelines to help states temporarily expand unemployment eligibility to a number of individuals who would not otherwise qualify. This may be partially to blame for employees refusing to work in favor of collecting UI, but anyone who thinks they can lean on those guidelines without a viable reason for their UI claim is sorely mistaken.

 

States May Not Adopt All UI Expansion Guidelines

First, though the feds are “recommending” states expand UI eligibility in light of the current pandemic, they did not mandate that expansion. As a result, some states have been slow to adopt the expanded guidelines or may not be relying on them at all.

 

Expansion Is Intended for Those Directly Impacted by COVID-19

Further, most of the eligibility criteria under the expanded benefits involve being sick with COVID-19, seeking medical diagnosis for COVID-19, having a member of your household contract COVID-19, or facing the closure of your child’s school as a result of COVID-19. The only portion of the law that seems to leave some room for interpretation concerns an employee who “has to quit as a direct result of the COVID-19 public health emergency.”

 

Employees Who “Have to Quit”

The key here is the phrase “has to quit,” and the burden of proof that your employee “had to quit” as a result of the pandemic is going to be on them. If they decide to quit as a result of COVID-19, this might negatively impact their ability to collect UI. And, what’s more, the Department of Labor has released guidance saying that “quitting work without good cause to obtain additional benefits may be considered fraud.”

Not only will that make them ineligible for benefits now, it might make them ineligible to receive unemployment payments indefinitely. If an employee’s collection of UI payments is deemed fraudulent, they will also need to repay any fraudulent income they may have received and will likely wind up facing a criminal investigation, as well.

If your employee quits due to legitimate workplace safety concerns, however, this may qualify them to collect UI. If you open your business in violation of a local stay-at-home order or industry-specific standards, employees who refuse to work or quit due to legitimate workplace safety concerns, or simply because they cannot legally reach the office, may well qualify for unemployment. Opening too early would also mean subjecting your business and employees to substantial risk.

Click for free access to your HR Vault software, free for the life of your business

 

“Supercharged” unemployment benefits are scheduled to expire.

Though the expansion of unemployment eligibility extends through the end of the year, the additional payments of “supercharged” unemployment benefits are set to expire on July 31, 2020.

This means that, even under the best circumstances, those additional payments will be going away relatively quickly. And, though collecting a comfortable income for doing nothing over the next couple months might seem like a dream come true to some, your employees should know that refusing work now to collect unemployment in the short term will probably not seem like such a good idea when they are later forced to look for work alongside the millions of other people who became unemployed during the pandemic.

 

How to handle an employee who refuses work.

When bringing your team back to work from a furlough or temporary closure, send a letter, email, or memo informing your employees about your intention to reopen and your proposed timeline for doing so. We’ve pre-loaded our HR Vault software with the documents you need to bring your team back to work. Click here to sign up for your free account.

Ask them to reach out with any questions or concerns via text or email so that you can keep the conversation on file should you ever need to refer back to it later.

 

Ask them why they are refusing work.

If an employee refuses to come back to work, it may be for a viable reason. So, you’ll want to ask them “Why?” before doing anything else.

Don’t make any assumptions about why an employee is hesitant to return to work. Ask them to provide you with details, in writing, about why they are unable to return to work as requested. They may need more notice to set up childcare, they may be ill, they may be taking care of an ill family member, they may be worried about their own health, they may be unclear on how unemployment benefits work, etc. It’s important to find out the employee’s motivation for refusing work before you make any further decisions. 

 

Let them know that accepting work is a condition of continued employment.

If your employee cannot return to work on your proposed timeline for a legitimate reason such as illness in their family or the inability to find care for a child, make an effort to work with them to resolve the issue. The employee may be eligible for paid leave under FFCRA. If not, then you may wish to provide them with a furlough extension or a personal leave of absence. In either case, work with the employee to find a mutually agreed upon date for return, provide it to the employee in writing, and have them sign the document for your records.

If they fail to provide you with a reason for refusing to work, if their only reason for refusing to return is receiving UI benefits, or they provide a reason that is not otherwise protected by law, remind them that accepting the work being offered to them is a condition of employment. 

 

Related Reading: Unemployment Drastically Expanded Under the Cares Act

 

Not showing up to work constitutes job abandonment.

In these specific situations, you can let your employees know that refusing to work the hours you offer will be seen as job abandonment, which will be treated as a resignation. 

Be clear that you will need to report this to your state unemployment board, and that resigning may negatively affect their ability to collect UI. 

 

Should I call the state unemployment office to inform them?

It’s probably not in your best interest to go out of your way to tell the unemployment office that your employee quit work to stay on UI. 

If your state is asking you to fill out forms and respond to ongoing status updates, answer truthfully. But, as to whether you should spend time trying to get through to the state to inform them that you think the employee in question should not be eligible — given the current circumstances, the answer is ,“No.”

It’s the state’s job to determine whether or not an employee is eligible for benefits. Plus, you’ve got an office to open and other employees to worry about. Rest assured that any employee who refuses work now is likely to regret that decision later when they find themselves in an incredibly competitive job market without a stable income, without benefits, and without supercharged unemployment payments.

 

Conclusion

If your employee is refusing to work because they would rather be collecting unemployment, they probably do not have a clear understanding of how unemployment works.

Being ready and willing to work is a condition of most unemployment programs. Therefore, employees who quit or refuse to work just because they want to stay on unemployment will likely be ineligible for that unemployment and may also be committing fraud.

Make sure you are clear about your expectations when recalling your team, be open to any employee concerns that might come up about going back to work, and document your conversations with employees along the way. 

Understand that your state determines unemployment eligibility and that, once you’ve done your part to respond to claims, it’s out of your hands. Your time is best spent looking forward and dealing with the employees who are ready and willing to get back to work rather than focusing on the ones who might be falling by the wayside.

Finally, check out CEDR’s “Guide to Bringing Your Employees Back” for more on the process of reopening your business.

 

Related Reading:

Unemployment Eligibility Expanded Under the CARES Act

Practical Guidance for Employers Handling the Coronavirus Outbreak

CARES Act: SBA Loans and the Paycheck Protection Program

Families First Coronavirus Response Act Guidance and FAQ

Updated May 27, 2020. Originally published April 23, 2020.

Comments have been temporarily disabled, as we are focusing on responding to questions from our existing CEDR HR Solution Center members. If you would like to learn more about becoming a Solution Center member to gain access to our team of HR professionals, please email us at info@cedrsolutions.com.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.

Comments

  1. AvatarKathy Raymond says

    Is there anything in the CARES act that protects the supercharged Unemployment if we return our staff and then have to furlough them again?

    • AvatarJames McLane says

      My understanding is that any employee who receives at least $1 in state unemployment benefits for a given week until the end of July 2020 will receive the extra $600 in FPUC. Beyond that, it’s down to that state’s specific UI policies on whether and when an employee can begin receiving benefits (or start receiving them again).

  2. AvatarPatti Britton says

    If an employee wants to stay on unemployment because of the additional $600/wk and refuses to accept what the owner is going to start paying them from PPP money how should that be handled if the business is still considered non-essential and not open to patients yet?

    • AvatarCEDR Solutions says

      From your question, it sounds like your employees are currently not working because the business is non-essential and cannot reopen, but you have the PPP loan and need to spend it on payroll. So, you are going to pay your employees not to work. But, one employee does not want to be paid because they would prefer to be on “supercharged” unemployment.

      If this is the case, then you should ask that employee to put this request in writing. Then, you should accept the request as her/his voluntary resignation. This would be a short sighted decision on the part of the employee as s/he would be out of a job and likely ineligible for UI. Plus, those supercharged benefits are temporary so choosing UI rather than stable employment is a serious gamble under current economic conditions.

      If you need to pay your employees to work or not to work in order to achieve loan forgiveness, then you should do this in consultation with your CPA or financial advisor and in compliance with all federal/state/local orders. Any employee who refuses this money is effectively resigning. That employee would then have to report to the unemployment office that s/he refused pay from their employer to stay on unemployment. That will likely not end well.

  3. Avatar says

    If I had 6 employees on feb 6th let’;s say and one was released due to not enough hrs for hygiene and now have 5 employees but placed 6 as the number on the ppp application based on the report from payroll company of 2019. Now let us say one employee will not come back due to not making as much as she would on unemployment, so now I have only 4 employees. Does the reduction from 6 in 2019 to 4 in 2020 right now affect my loan forgiveness if I still can get them 75% of the loan???

    • AvatarCEDR Solutions says

      This is probably a question best answered by your financial planner or your CPA, as we specialize in providing HR advice and this is a little outside of our typical scope. However, we recommend you read this article on the CARES Act and PPP Loans as it may provide some clarity for you with respect on how loan forgiveness for that program is supposed to work.

      Per that article: “The amount of loan forgiveness you are eligible for depends on the average number of full-time employees you have on payroll during the 8 weeks after you receive the loan compared to the average number of full time employees you have on payroll between February 15, 2019 to June 30, 2019 OR January 1, 2020 to February 29, 2020.” This suggests you will need 6 full-time employees to qualify for your maximum forgiveness.

      Keep in mind that our understanding of the law is that it gives you until 6/30/2020 to eliminate reductions in wages or staff made between 2/15/2020 and 4/26/2020. So, if the employee returns to work (or you hire a new employee) before that deadline, that should satisfy the requirements for forgiveness. Again, this is intended as general guidance and you’ll want to speak with your CPA or bankers to get actionable financial advice related to your business, your payroll, and your PPP loan.

  4. AvatarKandis Smith says

    My laid off employee has decided to schedule a hernia repair around the time the business is supposed to open back up. She stated in a text that her doctor said the recovery is six weeks and that she would understand if I need to hire someone else if I need to start back up again. Can I request that she ask her doctor to provide a letter addressed to me detailing the exact recovery time on her doctor’s letterhead? Can I ask for this letter before I send a rehire letter to the employee, that way I can give an accurate start date? (I don’t give any paid sick time or paid time off and I don’t provide health insurance.) Thank you!

    • AvatarCEDR Solutions says

      The answer to this question is trickier than it seems. If your employee was indeed “laid off,” meaning she was separated from employment, then she is no longer your employee. This means you are not technically required to provide her with a medical leave of absence, nor are you required to extend her start date — under normal circumstances, if an applicant is not able to start on the day you need them, then they are not in a position to accept your offer.

      In this case, your best option may be to tell this ex-employee that she should reach out to you in six weeks when she is ready to work and that she will be eligible for rehire at that time, if you have a position available. This option would give you a bit more flexibility, as a lot can happen in six weeks.

      This option may have some legal risk if you rehire all of your former employees except the one employee with a medical issue. While it would be difficult to make the legal argument that the applicant was discriminated against on the basis of having a temporary medical disability because you refused to extend her start date, it doesn’t mean a plaintiff’s attorney would not try. For this reason, you should rehire this employee when she is ready to work, if feasible.

      If you want to ask the ex-employee for a doctor’s note to verify when she can start working, you can, but this will make her look more like your employee and less like an applicant for rehire, which will make it even riskier not to allow her to return to work once she has recovered.

      If you furloughed your employees, i.e. did not separate them from employment, or were unclear about whether they were laid off or furloughed, then you should assume they are still your employees and follow your leave of absence policy for this request. In this case, you should definitely require a doctor’s note verifying the need for leave and set an expected return to work date.

  5. Avatar says

    I want to thank CEDR Solutions for taking the time and effort to compile and share this vital information for all AAO members. Your generosity has given me another reason to be positive. Thank you very much! Jason