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As States Reopen, Fear of Virus Won’t Justify Jobless Benefits

April 22, 2020, 7:16 PM

Laid-off workers counting on unemployment benefits to carry them safely through the Covid-19 pandemic face a wake-up call in Georgia and other states where governors are eager to reopen for business.

Once employers call their employees back, workers will need a state-accepted reason if they wish to decline the job and keep collecting unemployment benefits. A fear of going to work during the pandemic isn’t likely to suffice.

The same goes for self-employed and independent contractors, such as the hair stylists and massage therapists that Georgia’s Gov. Brian Kemp (R) cleared to reopen for business beginning Friday, subject to social distancing and health guidelines.

“This is a very hard nuance to draw, but generally if somebody just simply is fearful of the virus that’s generally not somebody who would be eligible,” said a senior official at the U.S. Department of Labor.

A handful of Southern states have begun laying out timelines for reopening types of businesses that had been ordered closed to promote social distancing and lessen the spread of the virus, including Georgia, South Carolina, and Tennessee. Leaders in other states are feeling pressure to reopen from public protests at state capitols and public urging from the president, which could result in millions of service workers being forced back out into the workforce before they’re confident the virus is under control.

“It’s going to put many workers in a difficult situation who don’t feel safe going back,” said Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute, which researches and advocates for worker protections.

Many states still haven’t begun paying benefits for pandemic unemployment assistance—a newly created program as part of the federal CARES Act to benefit self-employed and independent contractors—as states had to build new application and processing systems for those claims. Once they begin paying, independent contractors might have more flexibility than traditional employees to decide when they return to work.

The latest federal DOL guidance on the program indicates workers can qualify based on a substantial reduction in the amount of work available, Shierholz said. This means, for example, Uber Technologies Inc. or Lyft Inc. drivers should be able to keep filing for benefits based on unusually low customer demand, she said, although each state’s unemployment agency would ultimately have the decision to grant or deny claims.

Money vs. Health

The Georgia governor, in particular, has drawn criticism for his reopening plan and accusations that he’s prioritizing the economy and saving the state money on unemployment benefits ahead of public health and protecting people’s lives.

The mindset is that we’re facing a self-inflicted recession, and state and federal leaders feel pressure to prevent it, Shierholz said.

“I get that, but it is utterly misguided. It’s going to make things worse,” she added.

For workers who don’t feel safe going back to work yet, Georgia officials are “encouraging employees to communicate with their employers on plans to safely return to work,” said Mark Butler, the state’s labor commissioner, in a statement provided through the governor’s office on Wednesday. The state also has an emergency rule in place that will let workers return to work part time, earning up to $300 per week, without losing their unemployment benefits.

In announcing his plans earlier in the week, Kemp cited the need for workers and small-business owners to return to earning income.

“We’re talking about someone who has put their whole life into building a business,” he said. Right now they’re “at home, going broke worrying about whether they can feed their children, make the mortgage payment.”

Eligibility and ‘the Honor System’

In response to Covid-19, states expanded unemployment eligibility to varying degrees.

In Georgia, for example, a lack of available child care related to Covid-19 is an acceptable reason for claiming unemployment benefits under a state labor department emergency rule.

But Georgia Labor Department spokeswoman Kersha Cartwright echoed the federal DOL official’s interpretation that feeling unsafe going back to work because of the virus isn’t an acceptable reason.

Larry Kudlow, director of the White House’s National Economic Council, told reporters Tuesday that the eligibility question for workers who feel unsafe returning to work wouldn’t be decided at the federal level.

“Well, I can’t speak to that because that will be done locally, at the state level or the city level. There will be options of course,” Kudlow said.

Employees whose employers call them back will need a valid reason if they continue claiming benefits instead of going to work, Cartwright said.

For independent contractors who don’t have a traditional employer to dictate their return, “we’re kind of counting on people to be honest and decide when it’s time to go back to work,” she said. “We’re going to have to go on the honor system.”

Any worker claiming benefits will have to certify each week that they were available for work and that they didn’t refuse any work in the previous week, Cartwright said.

Although states might not have developed it yet, Shierholz predicted Georgia and other states would have some kind of enforcement or audit process for benefits to independent contractors.

State officials in Maine and elsewhere previously noted they have strong incentive to make sure the new pandemic unemployment assistance benefits for independent contractors are only paid to legitimately eligible individuals, or else the states risk the federal DOL denying reimbursement.

To contact the reporters on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com; Ben Penn in Washington at bpenn@bloomberglaw.com; Cheryl Bolen in Washington at cbolen@bgov.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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