Massachusetts Enacts Further Unemployment Relief for Employers and Workers Impacted by COVID-19 Pandemic and Shutdown

Seyfarth Synopsis:  On May 27, 2020, Governor Baker signed into law An Act Providing Additional Support to Those Affected by the Novel Coronavirus Through the Unemployment Insurance System. This Act provides relief to both employers and workers who have been affected by the COVID-19 pandemic and Governor Baker’s March 10, 2020 declaration of a state of emergency. It does so by limiting the impact of COVID-19-related benefits on employer’s future contribution rates and payments, providing short-term relief for non-profits, providing for an increase in the number of weeks workers can receive benefits, and lifting the cap on the dependent allowance.

The Act provides critical relief to employers hamstrung as a result of the pandemic. Normally, when an employer lays off a worker and that worker receives unemployment benefits, the cost of the former worker’s unemployment benefits will be counted against the employer by either increasing the employer’s experience rating (the rating used to calculate the amount of contributions an employer owes) or payments made in lieu of contributions for employers who self-insure for purposes of unemployment insurance. The Act relieves employers of the future expense of the present layoffs by ensuring that benefits paid to any individual separated from employment due to circumstances related to or resulting from the effects of the pandemic or the March 10, 2020 declaration of a state of emergency do not negatively impact their future contributions or payments, so long as those benefits are paid for by federal funds. These provisions are retroactive to March 10, 2020, and will remain in place until the later of one year from the effective date of the Act, or 180 days from the lifting of the Governor’s March 10, 2020 declaration of a state of emergency.

The Act provides further relief for non-profits by instituting a 120-day grace period for paying contributions or making payments in lieu of contributions. During the grace period, no penalty or interest will be assessed against non-profits.

The Act provides significant benefits to workers as well. Normally, the number of weeks a worker may receive unemployment benefits is tied to the unemployment rate in the Commonwealth. However, the Act increases the number of weeks that a worker may receive unemployment benefits from 26 to 30 when there is a large influx of claims for unemployment benefits statewide (specifically, 100,000 initial claims in any week of a benefit year), unless the federal government has authorized a period of extended benefits, in which case the total benefits shall remain at 26 times the benefit rate until the federal extended benefits have been exhausted.

In addition, it removes the normal statutory cap on the dependency allowance. Normally, unemployment benefit recipients may receive an additional $25 per week for each dependent, but that amount is capped at 50% of the recipient’s base allowance. This cap can have the effect of limiting the dependent allowance for low-income workers. The Act eliminates the cap for a period of 540 days (approximately 18 months) from the date that the Governor’s March 10, 2020 declaration of a state of emergency is lifted.

In sum, the Act serves to lessen the financial burden of the COVID-19 pandemic and the Governor’s March 10, 2020 declaration of a state of emergency on both employers and workers. Employers in particular should be cognizant of these changes as they plan for the weeks and months ahead.