The historic Coronavirus Aid, Relief, and Economic Security (CARES) Act, which passed in late March, dramatically expands the amount of unemployment insurance provided to workers who've lost their jobs due to the pandemic.
The U.S. Labor Department reported Thursday that 6.6 million Americans filed unemployment claims in the last week, resulting in a total of roughly 16 million Americans, or 10% of the workforce, who've filed in the last three weeks. As the pandemic continues to upend the global economy, economists project 47 million U.S. jobs could be lost due to coronavirus, with the unemployment rate reaching 32%.
In addition to providing additional funds for unemployment insurance overall, the CARES Act includes a new program called Pandemic Unemployment Assistance (PUA), which expands benefits to workers who were previously ineligible, including roughly 16 million Americans who are self-employed, independent contractors and freelancers.
Here's what workers can expect.
Unemployment assistance will now extend to self-employed workers, including independent contractors, freelancers, farmers and gig workers. Self-employed workers with a limited liability company (LLC) or S corporation qualify.
This is a major change for many gig workers, such as Uber and Lyft drivers, who are typically classified as independent contractors and are therefore not eligible to receive employee benefits, paid leave and health care from on-demand gig companies. Gig workers who've experienced reduced demand, and therefore reduced earnings, amid the coronavirus outbreak may now qualify for unemployment insurance to partially replace lost wages.
Unemployment will also be extended to individuals seeking part-time work and those who don't have the sufficient work history (generally one year) previously required to file a claim.
Individuals will need to prove they've lost work as a direct result of the pandemic, including reasons such as being diagnosed with COVID-19, being mandated by a health official to quarantine, providing care for someone diagnosed with the virus, providing care to a child who can't attend school because it's closed, being scheduled to start a new job that's now closed or quitting a job as a direct result of the pandemic.
Individuals who are able to work from home with pay and workers receiving paid time off do not qualify for unemployment benefits under the CARES Act.
However, if a teleworker is unable to work due to becoming ill or caring for another person due to the virus, they may become eligible. If a worker has exhausted their PTO and is still out of work, they may qualify for unemployment benefits.
Benefits paid out under new new program will be modeled after Disaster Unemployment Assistance, which was created in 1974 to provide benefits to individuals who become unemployed due to a major natural disaster, including hurricanes, wildfires and major floods.
Where possible, unemployed workers will receive partial wage replacement (roughly 46% on average) of previous documented earnings.
At minimum, newly eligible workers will receive half the average unemployment benefit in their state. In January 2020, unemployed workers across the country were paid an average of $385 per week, according to the Center on Budget and Policy Priorities. By state, average benefits ranged from $213 in Mississippi to $546 in Massachusetts.
This benefit will last up to 39 weeks, or roughly 10 months, under the stimulus package.
On top of this benefit, unemployed workers will receive an additional $600 per week for dates of unemployment from March 27, the day the CARES Act was signed, until July 31. After that, individuals who are still unemployed will continue to receive their state-administered benefit for the remainder of their 39 weeks.
Let's say the average worker becomes unemployed on March 27. They will be newly eligible to receive roughly $190 per week (half of the national average) plus $600 per week, for a total of $790 per week for up to four months until July 31. For the remainder of their 39-week benefit window, or until about December 25, they will receive $190 per week.
While the CARES Act makes these federal funds available to unemployed workers, states still have to individually sign on to the agreement and set up the infrastructure to accept new unemployment claims and pay out increased unemployment benefits.
"What happens now is the U.S. Department of Labor has to issue guidance for states on how to set up these Pandemic Unemployment Assistance benefits," says Michele Evermore, senior researcher and policy analyst at the National Employment Law Project. That said, "I can't imaging a state not wanting to enter into an agreement with federal agency to get these benefits out."
Evermore adds it generally takes two to three weeks once someone has applied to actually get approved and start receiving payment. However, given the surge in unemployment claims, "I'd imagine it taking at least three to four weeks now," she tells CNBC Make It. "Some states may surprise us and get benefits out the door before that."
New York's Department of Labor website already has instructions for newly eligible workers to get organized and file for Pandemic Unemployment Assistance once it becomes available. This week, Michigan Gov. Gretchen Whitmer signed on to create new state assistance programs under the CARES Act; guidance around new eligibility and increased benefits will be announced "in the coming days."
Meanwhile, self-employed workers and independent contractors nationwide have expressed concern that they are unsure when they'll be able to apply for Pandemic Unemployment Assistance.
Until more clarity is available on a state-by-state basis, "state agency administrators have read the bill, know the provisions and are trying to get them in place as soon as possible," Evermore says. "I think states won't be too far behind federal guidance."
Each state administers their own unemployment insurance program, so it's crucial workers check their state department of labor website for the most up-to-date information.
Typically, individuals need to have the following information on hand to file an unemployment claim:
Workers are usually asked to provide their earnings history to calculate their unemployment benefit. But self-employed workers, freelancers and independent contractors may not be able to quickly access and compile their previous earnings.
Newly eligible workers should try to organize as much recent pay information as possible to have on hand when they're filing for unemployment for the first time, Evermore says.
Tax documents are a start, but Evermore recommends also compiling invoices, bank statements, notifications of deposit and other proofs of income for at least the last year.
"Whatever information you have that tells you how much you earned, have that ready," Evermore says.
Many state labor department offices have been overwhelmed with activity in recent weeks, resulting in site crashes and long waiting times to contact someone by phone. To avoid overwhelming websites and phone lines, some states are advising workers file a claim on a certain day of the week based on the first letter of their last name.
When workers do get through, benefits payments will be applied retroactively to workers who have lost their job due to the pandemic as far back as January 27, 2020.
The additional $600 weekly benefit will also be back-dated to March 27.
Ultimately, Evermore's guidance is to remain persistent.
"These benefits aren't going to be out tomorrow," she says. "Just like we were standing in line for toilet paper last week, this week people are going to have to wait to get their benefits filed. My advice is to be patient and keep trying."
Expanded unemployment assistance under the CARES Act is effective through December 2020.
This story has been updated to reflect current unemployment numbers.