Local Governmental Entities Receive Unemployment Relief

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law. This legislation provided emergency assistance for individuals, families, and businesses affected by the COVID-19 pandemic. It also included relief for certain entities from having to fund their unemployment costs, specifically state and local governments. An April 27, 2020, program letter from the U.S. Department of Labor to State Program Agencies explained:

Monthly transfers to the state accounts will represent 50 percent of the benefit disbursements for state and local governmental entities  . . . . Upon receipt of the report, the Department will certify to the Secretary of Treasury for the transfer of amounts from the Federal Unemployment Account to the account of the state in the unemployment trust fund.

These transfers target unemployment amounts paid between March 13 and December 31, 2020. The program letter also explains how the reimbursements work. If the relief provided by the state is 50 percent or less of the amount owed by the reimbursing employer, the entirety of the amount of funds transferred from the Federal Unemployment Account for each claim will be used by the state to reimburse the employer. The reimbursement is in addition to the extra $600 a week paid directly to employees who have had their hours reduced or jobs eliminated.

This much-needed relief comes at a time when public sector employers are struggling with budget shortfalls. Remember, public employers are not entitled to participate in the Paycheck Participation Program and do not receive all credits non-governmental employers are receiving for additional paid leave under the Families First Coronavirus Response Act.