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Trump Jobless Aid Plan Won’t Require Extra State Funds, DOL Says

Aug. 10, 2020, 6:45 PM

The U.S. Labor Department is advising states that they won’t necessarily have to pay extra under President Donald Trump’s new plan to boost unemployment insurance checks, even though it is unclear how the president’s executive action will be implemented and how long it could last.

The presidential action Trump signed on Saturday after virus-relief talks stalled would provide unemployed individuals with $400 in “lost wages assistance” on top of their regular state unemployment insurance benefits. The federal government would cover $300 of that total through disaster relief funds administered by the Federal Emergency Management Agency.

States are encouraged to bankroll the remaining $100 from their own budgets to meet a “cost-share requirement,” but they’re not obligated to do so, the Labor Department said in an advisory email to state unemployment agencies on Monday.

An alternative option would allow states to satisfy the cost-sharing requirement through their existing unemployment insurance weekly benefit payments, meaning the individual would receive only $300 in extra assistance on top of their weekly state-funded benefit.

“This option requires no new expenditures of state funds beyond what the state would already be paying out from state funds in regular unemployment compensation benefits,” John Pallasch, DOL’s assistant secretary for employment and training, wrote in the email, which Bloomberg Law obtained.

Trump’s move created uncertainty over how states would fund their share of the new program and whether the president’s action would withstand a potential legal challenge. Some state officials and Democratic lawmakers have said Trump’s supplemental benefits plan ignores the financial crunch many states face.

The department told state officials in the email that further guidance will be issued later this week, after DOL convenes a call with state unemployment insurance directors on Tuesday. A DOL media representative did not immediately respond to a request for comment.

Despite the flexibility outlined in the DOL email, states were still encouraged to tap into existing virus-relief funds under the CARES Act funds and to “identify other funds” to ensure Americans receive the maximum $400 weekly supplement, rather than just $300.

The new plan would cover weeks of unemployment insurance from Aug. 1 through Dec. 27, or when FEMA’s disaster relief fund balance drops to $25 billion, whichever happens first.

The DOL email message also leaves in doubt whether recipients of Pandemic Unemployment Assistance, a new program for gig-economy workers and other independent contractors, would be eligible for the federal plus-up under Trump’s model. The $600 extra weekly unemployment insurance benefit Congress provided in March lapsed Aug. 1, and whether and how to extend it has been a main sticking point in negotiations over another stimulus bill.

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

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com

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