Updated: White House Issues Memorandum Directing FEMA to Create a COVID-19 Lost Wages Assistance Program

August 19, 2020
August 19, 2020 Update. On August 12, 2020, the U.S. Department of Labor released Unemployment Insurance Program Letter No. 27-20, as well as a Questions and Answers document, which together provide states with technical assistance for administering the Lost Wages Assistance program discussed in this post. Additionally, the Federal Emergency Management Agency (“FEMA”) released a webpage on the Lost Wages Assistance program, a Fact Sheet regarding payments under the Lost Wages Assistance program, and a Questions and Answers document. Among other things, this new guidance (i) provides further clarification regarding eligible claimants, the covered period, and documentation requirements; and (ii) creates an option for individuals to receive $300 weekly payments without any additional state contribution. As of August 15, 2020, Arizona, Iowa, Louisiana, and New Mexico have agreed to participate in the Lost Wages Assistance program. This guidance has been incorporated into the below post.
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On August 8, 2020, President Trump signed a memorandum titled “Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019” (“White House Memo”). The White House Memo directs FEMA to provide additional unemployment benefits of up to $400 per week to individuals currently receiving unemployment benefits due to disruptions caused by COVID-19 (“Lost Wages Assistance”). These additional unemployment benefits would be 75% funded by the federal government, and the White House Memo additionally “call[s] upon the States” to use funds appropriated by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide the remaining funds. President Trump signed the White House Memo to extend economic relief after lawmakers were unable to reach agreement on a new stimulus package. It remains to be seen how states will react to the White House Memo, and it is possible that it will face future legal challenges. Certain states have reported that they cannot afford the 25% match.
Our memorandum covering the CARES Act, including the unemployment programs that it created, is available here.
Lost Wages Assistance Program
The White House Memo directs FEMA to provide up to $44 billion from the Department of Homeland Security’s Disaster Relief Fund (“DRF”) for the provision of financial assistance to those who have lost employment as a result of the COVID-19 pandemic. Under this new program—which is intended to replace the Federal Pandemic Unemployment Compensation program created by the CARES Act that provided an additional $600 per week to individuals receiving unemployment benefits and expired on July 31—FEMA will provide 75% of the funding for a Lost Wages Assistance program under Section 408(e)(2) of the Stafford Act.*
  • Eligible States. States, including territories and the District of Columbia, may be eligible for the Lost Wages Assistance program if (i) the state requests from the FEMA Administrator a grant for Lost Wages Assistance and agrees to provide 25% of the necessary funding; and (ii) the state administers delivery of financial assistance for lost wages in conjunction with the state’s unemployment insurance system. Eligible States are required to notify individuals who may be eligible for Lost Wages Assistance.
  • Eligible Claimants. Individuals eligible for this program will be those who (i) provide a self-certification that the claimant is unemployed or partially unemployed due to disruptions caused by COVID-19, and (ii) receive, for the week lost wages assistance is sought, at least $100 per week of any of the following benefits:
    • Unemployment compensation;
    • Pandemic Emergency Unemployment Compensation;
    • Pandemic Unemployment Assistance (note that individuals receiving Pandemic Unemployment Assistance are presumed to have met the self-certification requirements);
    • Extended Benefits;
    • Short-Time Compensation;
    • Trade Readjustment Allowance; or
    • Payments under the Self-Employment Assistant program.
An individual who was previously unemployed or partially unemployed as a result of COVID-19 but who stopped receiving unemployment benefits as a result of becoming employed after August 1, 2020, may in certain circumstances still be retroactively eligible for Lost Wages Assistance for the period after August 1, 2020 until he or she regained employment.
Lost Wages Assistance is not payable to individuals solely collecting (i) Disaster Unemployment Assistance or (ii) “Additional Benefits,” which are benefits provided for in some states during periods of high unemployment for individuals in approved training who exhaust benefits.
  • Documentation. States will need to develop a self-certification process to allow individuals to make the required self-certifications. There is currently no documentation requirement related to individuals’ self-certifications that their unemployment or partial unemployment is due to disruptions caused by COVID-19. Unlike Pandemic Unemployment Assistance, which provides benefits to individuals unable to work due to a COVID-19-related reason listed in the CARES Act, there is no requirement under the Lost Wages Assistance program that an individual’s job separation be directly related to COVID-19. Rather, “[a]t the time of self-certification for the program, the individual must be unemployed or partially unemployed due to disruptions caused by COVID-19.”
  • Assistance Amount. Eligible States that contribute $100 of the Lost Wages Assistance will be authorized to provide a $400 payment per week to Eligible Claimants in addition to any other unemployment benefits.
Alternatively, states may choose to satisfy their 25% contribution requirement with no additional state payout by counting funds that are already used to provide regular state unemployment insurance payments toward the state match. In that case, Eligible Claimants will receive a payment of $300 per week in addition to any other unemployment benefits. States using this option must demonstrate at the aggregate level that the total of their state-funded unemployment benefits to claimants receiving Lost Wages Assistance were at least 25% of the total Lost Wages Assistance benefits paid in conjunction with all of the unemployment programs listed above.
  • Covered Period. Lost Wages Assistance will be available from the week of unemployment ending on or after August 1, 2020, through weeks of unemployment ending not later than December 27, 2020. The Lost Wages Assistance program may be terminated earlier if (i) FEMA expends $44 billion in funding from the DRF; (ii) the DRF account decreases to $25 billion; or (iii) “upon enactment of legislation providing, due to the COVID-19 outbreak, supplemental Federal unemployment compensation, or similar compensation, for unemployed or underemployed individuals.”
  • Administration. FEMA will not administer benefits directly to individuals. Instead, states will distribute the funds through their unemployment insurance programs as a supplemental benefit. Administrative costs for funding the Lost Wages Assistance program, including any changes to existing unemployment insurance systems to accommodate the Lost Wages Assistance program, will also be covered by FEMA.
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The coronavirus situation is fluid, and laws are changing rapidly. Our recent memoranda and other information discussing various aspects of coronavirus can be found here.
*This provision provides that following a major disaster declaration, the president “may provide financial assistance . . . to an individual or household . . . to address personal property, transportation, and other necessary expenses or serious needs resulting from the major disaster.” 42 U.S.C. § 5174(e)(2).