Unemployment Benefits By Executive Order: Don’t Expect The Extra $400 Any Time Soon

The special pandemic unemployment benefits under the CARES Act, which provided $600 per week, recently expired. In an executive order on August 8, President Trump appeared to continue these unemployment benefits at $400 per week, at least until a new law provides supplemental federal unemployment compensation.

However, these benefits by presidential executive order stand on shaky constitutional ground. They may take a while to implement. Depending on your state, they may never arrive.

To find out what the deal is, I turned to Amanda Thibodeau, an attorney at Morse, a law firm in the Boston area. She’s the firm’s expert on Massachusetts Unemployment Insurance, general unemployment mechanics used in various states, and the federal program. Earlier this year I interviewed her for a series of Forbes.com articles on unemployment insurance for the self-employed, independent contractors, and gig-economy workers.

Six Facts About The Executive Order

Below are six points about the executive order that Thibodeau explained to me.

1. It directs the Federal Emergency Management Agency (FEMA) to pay the $400 per week from the Department of Homeland Security’s Disaster Relief Fund (DRF).

2. The enhanced unemployment benefits are retroactive to August 1, 2020, and will continue until December 6, 2020. They may end sooner if the DRF balance drops to $25 billion (it currently has $70 billion).

3. The federal government will cover 75% of the payment (i.e. $300 of the $400). States will need to pick up the additional $100 per week from funds allocated to them via the Coronavirus Relief Fund (CRF) under the CARES Act.

4. As with the original CARES Act, unemployed workers will be eligible for the weekly benefit if they otherwise qualify for regular unemployment compensation, Pandemic Emergency Unemployment Compensation (PEUC) under the CARES Act, Pandemic Unemployment Assistance (PUA) under the CARES Act, Extended Benefits, Short-Time Compensation, or a few other programs.

5. However, unlike the previous Federal Pandemic Unemployment Compensation (FPUC) benefits, the executive order disqualifies workers receiving less than $100 per week in unemployment benefits. Under the FPUC, workers who received at least $1 in unemployment benefits qualified for the additional $600 per week.

6. As with regular unemployment benefits, workers apply through their state unemployment office and will be subject to that state’s unemployment requirements, such as work-search criteria.

You May Not Really Get These Unemployment Benefits

Thibodeau points out that “it is unclear when workers may see these enhanced unemployment benefits.” She explained that although the unemployed are eligible for payments starting at the beginning of August, states will need time to get the system set up and issue funding. “Once it’s up and running,” she told me, “eligible workers will collect retroactive benefits, but that could be a matter of weeks, or months in some cases.”

David A. Lawrence, an attorney with the Detroit-area law firm Couzens Lansky, notes that each state must agree to participate in the program for its residents to receive the federal funding. Depending on the state, that assent is not necessarily a given. Citing a statement issued by Michigan’s Governor Whitmer on August 9, Lawrence says “it seems Michigan will not agree to the cost-sharing aspect of the program, so the extra benefits will not be provided in Michigan.” Other state governors are taking a similar position about not having enough funds for the $100 extra weekly payment, such as the governors of Kentucky and New York.

Plus, Thibodeau points out that the president’s executive order could also face legal challenges for being unconstitutional. The executive order invokes the president’s powers under the Stafford Disaster Relief and Emergency Assistance Act. Without specific authorization from Congress, it’s not clear that this law can be used to fund unemployment benefits, according to constitutional scholars.

For now, Thibodeau recommends that you continue to apply for unemployment benefits through your state. You will need to comply with any state-specific eligibility requirements to remain qualified for the enhanced benefits.