Unemployment Insurance: Taking Stock in New York State

New York state is inching toward one million claims for unemployment insurance (UI) since social distancing measures took effect. In this explainer, we take stock of state and federal changes to the UI system in the first five weeks of the coronavirus crisis. Along the way, we hope to demystify the system for readers, provide links to resources, and raise three important policy questions that do not yet have answers.

Under normal circumstances, unemployment benefits can be difficult to access. Workers must be unemployed through no fault of their own, and employers are incentivized to contest workers’ claims by alleging misconduct. Many workers are unaware that they are eligible. This includes work-authorized immigrants who believe that UI is only for citizens or who believe that claiming it makes them ‘public charges.’ Similarly, some app-based gig workers believe they are self-employed when they are employees for purposes of unemployment insurance.

In the past five weeks, it has been even more difficult to claim UI benefits. Laid-off workers had difficulty using the website of the New York State Department of Labor and getting through to it on the phone. Frustrated applicants would spend several days calling dozens of times, normally failing to get through, and sometimes having their calls dropped when at last they did reach the claims center. New York state took several steps to make it easier to access benefits: adding servers, hiring extra staff, expanding hours, streamlining the application process, designating specific days for claimants to call, and finally advising claimants ‘don’t call us, we’ll call you.’

The situation is further confused by recent changes at the federal level under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Beyond the normal unemployment insurance benefits administered by states, the CARES Act created three new federal tax-funded benefits. This flow chart illustrates who is eligible.

Pandemic Unemployment Assistance (PUA) extends up to 39 weeks of federal unemployment benefits to people ineligible for traditional UI – such as the self-employed, workers with very low earnings, and some recent entrants to the labor market – who cannot work due to the COVID-19 crisis. The full list of criteria can be found here. In order to access PUA, New Yorkers must file for traditional UI, be rejected, and then apply for PUA.

Pandemic Emergency Unemployment Compensation (PEUC) extends 13 weeks of UI benefits to claimants who have exhausted their unemployment benefits. In New York, new claimants will be able to receive unemployment benefits for a total of 39 weeks and (according to this flowchart) people who have recently exhausted their 26 weeks of benefits can receive 13 more weeks by applying again for UI.

Pandemic Unemployment Compensation (PUC) provides a flat-rate $600-per-week payment on top of other unemployment benefits received, including traditional UI, PUA, PEUC, and other unemployment-related programs such as New York’s Shared Work Program and Trade Adjustment Assistance. Anyone receiving even one dollar ($1) of these benefits in a given week will receive the full amount on top of their other benefits. This payment should not affect an individual’s eligibility for some means-tested benefits such as Medicaid.

Because unemployment insurance is a partnership between federal and state governments, much of the impact of these federal changes for New Yorkers depends on decisions by the State. States already vary in terms of the generosity of the benefits, their duration, and their restrictiveness in administration. New York’s UI system is relatively liberal and generous. The CARES Act creates additional temporary flexibility, and states have reacted in varying ways, as this comparison shows.

One important area of ambiguity in New York State concerns work search requirements. To be eligible for UI, applicants must be able to work, available to work immediately, and actively seeking work. Recipients are required to keep a written record of work-search activities, attend appointments at a local career center, and accept any ‘suitable’ job offers. Recipients can be audited and penalized for not being able to demonstrate that they are actively searching for work.

Many of the work-search activities listed on the DOL’s website are difficult to carry out under conditions of social distancing and mass layoffs:

• Visiting work sites of employers that ‘can reasonably expected to have job openings’

• Attending job interviews and job-search seminars

• Accessing services from the local career center

The CARES Act recognizes that individuals might be “unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction” and allows states to “provide flexibility in meeting such [work search] requirements” in those cases.

How do New Yorkers balance their work search requirements with social distancing? Unlike several other states, New York has not announced a temporary waiver to these requirements. This is extremely important, because if UI recipients are not able to search for work, they may be penalized later.

Another area of uncertainty concerns non-citizens. Immigration status does affect the eligibility of work-authorized people for UI, and the Department of Homeland Security has clarified that receiving UI does not violate the prohibition against being a ‘public charge.’ However, it may be that the three new federal benefits, like some federal disaster-related unemployment benefits, will exclude certain groups of work-authorized immigrants. It is also unclear whether the federal government will leave it to the states to decide. This page outlines the issues.

Finally, employers also have unanswered questions about the administration of UI in New York State, chiefly around experience rating. States are normally required to penalize employers who lay workers off by charging them higher UI premiums in subsequent years. Employers therefore have an incentive to discourage their laid-off workers from applying for UI and to contest workers’ UI claims, typically by alleging misconduct.

Arguably, it is unfair to punish employers for coronavirus-related layoffs, and the CARES Act permits states to suspend such penalties. New York, however, is not among the states that has announced a suspension of experience rating, and this creates additional uncertainty for employers and workers. Keeping experience rating creates a strong incentive for employers to contest their former employees’ UI claims, leading to a long backlog in administrative hearings and resulting long delays in receiving benefits for many people who are eligible.

The situation is changing quickly, and we may have answers to these questions soon. We are collecting questions through social media and will be posting Q&A-style fact sheets in the next few weeks.