March 27 - Stay-at-Home Order and Unemployment Benefits Increase
Updated: Apr 3, 2020
Well, things started rather abruptly this morning with calls and accusations that I was single handedly trying to shut down construction in Indiana and I have once again been reminded of the amazing power of rumors and misinformation. More on that later!
For now though, with the news about the CARES act hitting job sites all over the state, we are getting a lot of questions about unemployment benefits.
What will the unemployment benefit be here in Indiana?
The base rate is $390. Add in the $600 and you have $990 per week…all the way through till July.
Will furloughed individuals be able to get unemployment?
If my employee is furloughed, do I need to pay benefits?
Will my unemployment experience rate go up during this time period?
In sub-section 1:b of the Governor’s Executive Order 20-5, it states that “The DWD shall not assess certain experience rate penalties to employers as a result of employees receiving unemployment benefits related to COVID-19.
In the DWD’s own Q&A form, it responds:
Q1. If I lay people off due to COVID-19, will it affect my Merit rate / tax rate next year?
A1. Layoffs due to COVID-19 will not be charged to contributory employers, but will be mutualized to the entire contributory employer pool. More information regarding this will be sent to employers soon. Layoffs by reimbursable employers will be charged to the employer dollar-for-dollar, in the same manner they have always been charged.
It's also worth considering is that Unemployment Insurance (UI) taxes are ultimately a combination of federal (FUTA) and state taxes. Generally, state UI tax payments can be credited against FUTA taxes. In Indiana, our UI tax is referred to as SUTA. Because Indiana borrowed federal funds to pay UI benefits in the wake of the recession and is in the process of paying that money back, the amount of SUTA that may be credited against FUTA is lower than it otherwise would be but is getting better as IN repays the federal funds (its "loan"). Thus, all other things being equal, a member's net "unemployment tax" is being and has been reduced due to the SUTA credit (against FUTA) increasing over time since the recession. That's a positive!
So take it all together and like I said…its complicated.
· The taxable wage base on which SUTA is based has been $9,500 since 2011 and is set to remain there until this year. This amount could be changed (for better or worse). That's a potential negative.
· The standard rate for SUTA for newer employers may change year to year. It has been stable around 2.5% with the construction industry having a higher starting rate. Will the standard rate change? That’s a potential negative.
· For established employers, rates are influenced by experience ratings (which, per EO 20-05, experience ratings won't be affected by COVID). That's a positive.
· But, the Q&A indicates that everyone’s rates may change as things are "mutualized to the entire contributory pool" or, for reimbursable employers, charged back to the employer. That's a potential negative.
Can people get both FESLA/FMLA benefits and unemployment benefits?
Not at the same time. But I wouldn’t be surprised if there weren’t folks planning on how they can claim their FESLA benefit, slide into unemployment, wait out their insurance bank, go back and get a job and THEN qualify for FMLA benefits all within the time frame of this legislation. To be fair, I don’t think this would be that many people, but who knows?
But wait a minute! Didn’t you send something out on the huge amount of money being released under SBA loans whose forgiveness is predicated upon keeping people in our payroll?
Yes. Yes we did. And we too have seen the nice little pickle the feds have put us in with this and we don’t have any guidance on how best to navigate it just yet. I have active inquiries out to National seeking information on this one. I’ll keep you posted.
While we’re on the subject of massive policy contradictions, won’t this huge improvement in unemployment benefits coupled with fear and uncertainty about exposure on job sites make it really hard to get people to stay working all while the construction exemption to the Governor’s stay-at-home order specifies we have to be out there working on all construction?
And now we get to where I’m being accused of trying to shut down all construction in Indiana. Let’s start by saying that I’m not. I have not reached out to the Governor’s office, nor would I without direction from all of you.
What happened is that I asked the question. Last night we had yet another scare on a job (there’s a new one every single day now) where someone has supposedly tested positive or been exposed to someone who has, and now everyone on that job is threatening to not show up to work the next day.
It’s happening so frequently now… and that’s even before the CARES act goes into effect. I honestly believe that fear and the chance to make decent money while staying safe is going to cause us a LOT of problems in the weeks to come. Moreover, the existing language of the Executive Order makes it clear that all construction can be performed so all of you are being hounded by GC’s, owners, and CM’s to deliver projects on schedule. Frankly that’s ridiculous! So last night, I asked my fellow heads of construction associations what they would think about narrowing the exemption to only work performed on life critical services and infrastructure. Word got out and rumors spread and now apparently not only is it being said that I contacted the State, but I have so much pull with the Governor that he’s going to do whatever I say. So let me say this again. That never happened.
However… and I’m going to be brutally honest here and probably piss some of you off. But I absolutely think everything but work performed on life essential services and infrastructure should be shut down. I think that our people’s lives are just as valuable as other people who’ve been ordered to stay at home.
Yes. There are places that need us. We are making hospital rooms in places that need them…sometimes in just days. We are keeping the power on in buildings where thousands of people depend upon our work. We are changing out production lines in facilities building ventilators, masks, and new drugs to treat this disease. We keep the lights on, the gas flowing, the internet up… we do the things that make life possible. I’ve never been more proud to be a part of this industry when I hear how our people are standing in the breach out there to help keep others alive.
That being said, our people are our greatest resource and we should be doing no less than any other industry to keep them and their loved ones safe. They’re scared. Every day I get calls from the IBEW talking about how it’s getting harder and harder to justify telling people to work in places that have nothing to do with life safety or infrastructure. We’ve told them we put their safety first for years…and now we ask them to work in places that, but for a lack of specificity in the Governor’s Executive order, would and should be shut down.
So I won’t hide and say I don’t think we need to get this scope of allowable work narrowed. But I also won’t act without your guidance. I know that some of you are in areas where there hasn’t been a single case and all of your work is up and operational and smooth. To you, the idea of shutting things down might seem ludicrous and I understand that. It’s a damned if you do, damned if you don’t situation.
The CARES act just passed. So very soon, unemployment will be $990 per week and this is real situation that will affect you all. At the very least I wanted to get the conversational ball rolling.
Let me know where you stand on narrowing the construction exemption and I'll act as all of you think I should proceed. Let’s get through this like we do everything else. Together... and for the good of the industry.
Thank you and stay safe.
Edit- NECA National has already put out a quick summary of the Act via email and I won’t reiterate it here. Like the FFCRA though, for a while we will be in limbo looking for additional guidance on how exactly all this will happen. As I’ve said in previous posts, the two key components for us will be the SBA loans and the unemployment insurance. We will keep you posted as we get the actual verbiage on the Act. If you want to dive ahead though and see a comprehensive breakdown of the entire act with LOTS of analysis, click here.