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New Jobless Aid for Gig Workers in Limbo Without DOL Guidance (1)

April 3, 2020, 7:04 PMUpdated: April 3, 2020, 9:22 PM

Providing unemployment insurance to gig-economy workers and other self-employed individuals who wouldn’t previously qualify is a critical feature of the federal coronavirus-response package, but the degree to which it will spare independent contractors from economic ruin depends on the Labor Department’s efforts to fill in large gaps in the law.

The $2 trillion CARES Act (Public Law 116-136), enacted March 27, launched the Pandemic Unemployment Assistance Program to aid this broad new class of workers who who don’t fit neatly into the traditional category of unemployed worker. Congress gave DOL the responsibility to clarify eligibility requirements for these workers, and to help overburdened states streamline benefits payments to them.

Advocates for businesses, workers, and state governments have been peppering the department with questions and recommendations—and calling for quick and accurate action.

“I think that time is of the essence,” said Doug Holmes, who lobbies for employers as president of UWC-Strategic Services on Unemployment & Workers’ Compensation. “It’s very important that the guidance be early, but it also needs to be accurate, because if you do something that is not accurate on the front end, then you’ll have to repair it later, and people will have claimed in the meantime.”

Independent contractors and other workers who were traditionally ineligible for regular unemployment benefits can receive Pandemic Unemployment Assistance for up to 39 weeks—on top of a $600 weekly supplemental check through July 31—if they meet one of 11 qualifying criteria. Those conditions include being diagnosed with Covid-19, caring for an infected person, or quitting one’s job because of direct effects of the pandemic. Crucially, the law authorized the labor secretary to establish “any additional criteria.”

“A careful read of the CARES Act suggests that Congress intended Pandemic Unemployment Assistance to be maximally expansive and as seamless of a program as possible,” said Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality. “The Department of Labor will play a key role in ensuring that the PUA program is effective, efficient, and equitable.”

States Waiting on Word

The DOL’s Employment and Training Administration published guidance Thursday night that summarized the CARES Act’s unemployment compensation terms, including for Pandemic Unemployment Assistance. The notice said additional details on PUA would be included in “forthcoming guidance.”

Until then, the statutory language poses numerous ambiguities that hinder the ability of those in need to get help under the new law, creating uncertainty for independent contractors and the businesses that rely on their talent.

While states can now begin processing claims for independent contractors, some state unemployment insurance offices say they can’t disburse benefits until the DOL acts.

Take Indiana, for instance, where applications submitted by gig workers and other self-employed individuals are in a “holding pattern,” said Fred Payne, commissioner of the Indiana Department of Workforce Development. Without federal direction, the state can’t update its system, and independent contractors’ claims are being denied, Payne said during a press conference Thursday.

In Virginia, the state employment agency said it too is waiting for DOL guidance in order to implement the unemployment-insurance changes. Sen. Mark Warner (D-Va.) wrote to Labor Secretary Eugene Scalia to urge prompt guidance to assist gig workers.

“There is no time to waste,” Warner wrote, adding that the department “should have already issued more comprehensive guidance to states this week.”

Gig Employers Benefit, Too

Business lobbying groups are getting involved because of the potential to increase the labor pool available to companies.

“I think most companies are in agreement that they want to see more of a safety net built so that more skilled folks will be attracted to the gig economy,” said Rich Meneghello, who represents employers as a partner at Fisher Phillips in Portland, Ore.

Making unemployment compensation available to gig workers during the pandemic means companies will “have a bigger pool of workers, and thus get more business,” said Meneghello, who runs his firm’s gig economy blog.

Industry lobbying groups such as the U.S. Chamber of Commerce have joined worker advocacy organizations in asking DOL to issue a form of technical guidance known as an “Unemployment Insurance Program Letter.” In the past, these notices would draw interest mostly from state workforce agencies, not the country’s largest corporate trade association.

Among the areas of confusion, drivers for Uber Technologies Inc. and Lyft Inc. aren’t expressly covered by Pandemic Unemployment Assistance under the law’s text if they decide to stay off the road to limit the spread of the virus or if social distancing leads to a steep decline in demand for their services. The department could choose to clarify that such scenarios would qualify a gig worker for benefits.

A senior official with the U.S. Chamber of Commerce said the group hopes the department will answer questions such as whether ride-share drivers will have to certify that they quit as a direct result of the virus, and how state agencies will determine when a decision to quit is directly linked to the pandemic.

“The Department has prioritized issuance of guidance on the PUA program as very high and our goal is to have it out in the next several days,” a Labor Department spokesperson said Friday.

Top Asks

The department can broaden the Pandemic Unemployment Assistance Program to cover a range of additional Covid-19 circumstances. One “obvious” example would be to qualify people who need to leave their job to provide care when their parents must be taken out of a longterm care facility to ensure physical distancing, said Georgetown’s Dutta-Gupta.

The department also should address the question of “how will state agencies determine that someone is really needed to care for a child whose school has closed?” the Chamber official said. “And if this drags on too long, we’ll get into a window where schools, particularly in the South, will not be closed because of coronavirus, but because it’s summer break.”

Maurice Emsellem, a program director with the National Employment Law Project, wants DOL to instruct states in how to efficiently process claims. Otherwise, Emsellem said he is concerned state agencies will fall into the same operational traps that plagued an existing disaster relief program that Pandemic Unemployment Assistance was modeled after.

Emsellem said he hopes the department’s guidance advises states that they must reduce unnecessary documentation requirements. Too much red tape would “not just hold up the claims, but also clog the phones with unnecessary questions,” Emsellem said.

“Right now, the priority is to get the checks out, help people pay their bills, and focus on streamlining the process,” he added.

—With assistance from Alex Ebert

(Updated with comment from the Labor Department in 19th paragraph. )

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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