State finality laws and CARES Act unemployment claims

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                Unemployment Insurance
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                       OUI/DL
             Washington, D.C. 20210                      DATE
                                                         December 29, 2023

ADVISORY:       UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 05-24

TO:             STATE WORKFORCE AGENCIES

FROM:           BRENT PARTON
                Principal Deputy Assistant Secretary

SUBJECT:        Application of State Finality Laws Regarding Temporary Unemployment
                Compensation (UC) Programs under the Coronavirus Aid, Relief, and
                Economic Security (CARES) Act

1. Purpose. To announce the Department of Labor’s (Department’s) interpretation concerning
   the application of state finality laws to temporary UC programs created under the
   Coronavirus Aid, Relief, and Economic Security (CARES) Act, as amended.

2. Action Requested. The Department’s Employment and Training Administration (ETA)
   requests that State Workforce Agency Administrators provide information contained in this
   Unemployment Insurance Program Letter (UIPL) to appropriate staff.

3. Summary and Background.

   a. Summary – Many states have finality provisions in their state UC laws that limit when
      the state may reconsider a prior decision or determination made on a UC claim. The
      Department defers to states to apply their finality laws to CARES Act UC claims.

   b. Background – The CARES Act (Public Law (Pub. L.) 116-136), enacted on March 27,
      2020, allows, among other things, states to enter into an agreement with the Secretary to
      administer the Pandemic Unemployment Assistance (PUA), Federal Pandemic
      Unemployment Compensation (FPUC), and Pandemic Emergency Unemployment
      Compensation (PEUC) programs and to receive full federal funding for the first week of
      compensable regular unemployment for states with no waiting week. See UIPL No. 14-
      20. The Continued Assistance for Unemployed Workers Act of 2020 (Continued
      Assistance Act) (Pub. L. 116-260), set forth at Division N, Title II, Subtitle A of the
      Consolidated Appropriations Act, 2021, extended the dates for states to administer these
      programs and allowed states to also enter into an agreement with the Secretary to
      administer the Mixed Earners Unemployment Compensation (MEUC) program. See
      UIPL No. 09-21. The American Rescue Plan Act of 2021 (ARPA) (Pub. L. 117-2)
      further extended the dates for states to administer the PUA, FPUC, PEUC, and MEUC
      programs and to receive full federal funding for the first waiting week through September
      6, 2021. See UIPL No. 14-21.
  RESCISSIONS                                            EXPIRATION DATE
  None                                                   Continuing

      All states voluntarily signed an “Agreement Implementing the Relief for Workers
      Affected by Coronavirus Act” (Agreement) with the Secretary in March 2020 to
      administer the PUA, FPUC, and PEUC programs. States without a waiting week also
      signed an addendum to receive full federal funding for the first week of compensable
      regular unemployment. The Agreement applied to the CARES Act and “any future
      amendments.” It also required states to use the CARES Act funds “for the purpose for
      which the money was paid to the state” and to “take such action as reasonably may be
      necessary to recover for the account of the United States all benefit amounts erroneously
      paid and restore any lost or misapplied funds paid to the state for benefits or the
      administration of [the] Agreement.” (Agreement, paragraphs I, VII, VIII). Nearly all
      states signed an addendum to the Agreement in January 2021 to also administer the
      MEUC program. The Agreement incorporates amendments to the CARES Act made by
      the Continued Assistance act and ARPA.

      There are situations where states have not yet implemented certain CARES Act UC
      requirements or have implemented or operated the CARES Act UC programs out of
      alignment with federal law, regulation, or policy. Typically, this would require the state
      to retroactively implement the requirements or correct the errors. However, some states
      have indicated that they cannot take the required actions to resolve the findings due to
      finality provisions of their UC laws prohibiting them from reconsidering a prior
      determination after a specified period of time has elapsed.

      The Department has consistently deferred to state finality laws with regard to the regular
      UC program. In this UIPL, we are providing updated guidance on the application of
      finality laws to the CARES Act programs.

4. Guidance.

   a. Application of State Finality Provisions to CARES Act UC Programs. The CARES
      Act UC programs are administered through voluntary agreements between states and the
      Department. With respect to the PUA program, the Department’s prior guidance has
      advised that where the CARES Act and the Department’s operating instructions are
      silent, states should refer to the Disaster Unemployment Assistance (DUA) regulations at
      20 C.F.R. Part 625 to the extent required by CARES Act section 2102(h), and where
      DUA regulations are silent, states should follow applicable state law for administering
      the regular UC program. See UIPL No. 16-20, Change 1. The DUA regulation provides
      that “[t]he provisions of the applicable State law concerning the right to request, or
      authority to undertake, reconsideration of a determination pertaining to regular
      compensation under the applicable State law shall apply to determinations pertaining to
      DUA.” 20 C.F.R. 625.9(c).

      The laws creating FPUC, MEUC, PEUC, and federal funding for the first week of
      benefits for states without waiting weeks, specifically provide that “[a]ny determination
      by a State agency under this section shall be subject to review in the same manner and to


         the same extent as determinations under the State unemployment compensation law, and
         only in that manner and to that extent.” See CARES Act §§ 2104(f)(4) (regarding FPUC
         and MEUC), 2105(f) (regarding the federal funding of the waiting week), and 2107(e)(4)
         (regarding PEUC). PUA did not include a similar provision.

         Pursuant to the Department’s authority under the CARES Act (and amendments) and the
         Agreement, States were instructed to retroactively implement new CARES Act
         requirements and correct implementation errors. See, e.g., UIPL 16-20, Changes 5 and 6.
         States were also advised that a state’s jurisdictional limitation cannot prevent the
         Department from taking action if a state is found to be out of compliance with the
         requirements of the CARES Act Agreement. UIPL 16-20, Change 6, § 4.a.ii. See
         International Union, United Auto., Aerospace and Agric. Implement Workers of America
         International Union v. Brock, 477 U.S. 274, 292 (1986). The Department made funding
         available to the states to recover CARES Act overpayments. See, e.g., UIPL 28-20,
         Changes 2 and 4. The CARES Act benefits programs ended on September 6, 2021, and
         the Department has been working with States to implement modernization efforts under
         ARPA.
         The Department is now updating its guidance to defer to states to apply their finality laws
         to the CARES Act UC programs. This means the Department will no longer exercise its
         authority to require retroactive actions for CARES Act UC programs where a State’s
         finality law applies. 1 Deference to state finality laws is both consistent with the CARES
         Act language referenced above and important to enabling states to concentrate their
         energies on adjudicating current claims and be forward-looking, focusing more of their
         energies and resources on engaging in the Department’s modernization and fraud
         prevention efforts to ensure that States will be well-prepared in the event of a future
         economic downturn.

    b. Effect of Application of Finality on Outstanding CARES Act Matters that may be
       Subject to Retroactive Action. Applying state finality laws to the CARES Act UC
       programs means that, in many instances, the state will not need to take retroactive action
       to resolve monitoring findings. However, application of state finality laws will not
       resolve all monitoring findings. For example, if a state’s law provides a three-year
       limitation on reconsidering prior determinations, the state must retroactively address
       applicable determinations that have not passed the three-year mark. If a state is relying
       on its finality law in administering the CARES Act UC programs, it should evaluate its
       outstanding monitoring findings and, if the state finality law limits the extent of
       retroactive action necessary, the state should provide an explanation to the appropriate
       ETA Regional Office.



  There are two commonly understood types of finality. The first limits the ability of the state agency to redetermine
or reconsider one of its prior determinations or decisions. The second limits the ability of a claimant or employer to
seek redetermination or reconsideration of a decision or to file an appeal from a determination or decision outside of
the specific timelines set out in state law. This UIPL applies to the first type of finality—state laws limiting the state
agency’s authority to reconsider or redetermine prior determinations or decisions, not those related to appeals.


       The application of state finality provisions will not prevent law enforcement agencies
       from investigating and prosecuting fraud under CARES Act programs, or from seeking
       appropriate sentences, including monetary penalties and restitution. States should
       continue efforts to collaborate with law enforcement agencies and refer potential CARES
       Act UC fraud cases for investigation and prosecution. See TEN No. 12-23.

5. Inquiries. Please direct inquiries to the appropriate ETA Regional Office.

6. References.
   • American Rescue Plan Act of 2021 (ARPA), including Title IX, Subtitle A, Crisis
      Support for Unemployed Workers (Pub. L. 117-2);
   • Consolidated Appropriations Act, 2021, including Division N, Title II, Subtitle A, The
      Continued Assistance for Unemployed Workers Act of 2020 (Continued Assistance Act)
      (Pub. L. 116-260);
   • Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including Title II,
      Subtitle A, Relief for Workers Affected by Coronavirus Act (Pub. L. 116-136);
   • Title III, Social Security Act of 1935 (42 U.S.C. § 503 et seq.);
   • 20 C.F.R. Part 625, Disaster Unemployment Assistance;
   • UIPL No. 14-21, American Rescue Plan Act of 2021(ARPA) – Key Unemployment
      Insurance (UI) provisions, issued March 15, 2021,
      https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-
      14-21;
   • UIPL No. 09-21, Continued Assistance for Unemployed Workers Act of 2020 (Continued
      Assistance Act) - Summary of Key Unemployment Insurance (UI) Provisions, issued
      December 30, 2020, https://www.dol.gov/agencies/eta/advisories/unemployment-
      insurance-program-letter-no-09-21;
   • UIPL No. 28-20, Change 4, Support for States to Resolve Outstanding Items from the
      Expired Coronavirus Aid, Relief, and Economic Security (CARES) Act Unemployment
      Compensation (UC) Programs, Including Additional Funding to Assist States with
      Reporting and Detection and Recovery of Overpayments, issued July 22, 2022,
      https://www.dol.gov/agencies/eta/advisories/uipl-no-28-20-change-4;
   • UIPL No. 28-20, Change 2, Additional Funding to Assist with Strengthening Fraud
      Detection and Prevention Efforts and the Recovery of Overpayments in the Pandemic
      Unemployment Assistance (PUA) and Pandemic Emergency Unemployment
      Compensation (PEUC) Programs, as well as Guidance on Processes for Combatting
      Identity Fraud, issued August 11, 2021,
      https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-
      28-20-change-2;
   • UIPL No. 16-20, Change 6, Pandemic Unemployment Assistance (PUA) Program:
      Updated Operating Instructions and Reporting Changes, issued September 3, 2021,
      https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-
      16-20-change-6;



   •   UIPL No. 16-20, Change 5, Expanded Eligibility Provisions for the Pandemic
       Unemployment Assistance (PUA) Program, issued February 25, 2021,
       https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-
       16-20-change-5;
   •   UIPL No. 16-20, Change 1, Coronavirus Aid, Relief, and Economic Security (CARES)
       Act of 2020 - Pandemic Unemployment Assistance (PUA) Program Reporting
       Instructions and Questions and Answers, issued April 27, 2020,
       https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-
       16-20-change-1;
   •   UIPL No. 14-20, Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 –
       Summary of Key Unemployment Insurance (UI) Provisions and Guidance Regarding
       Temporary Emergency State Staffing Flexibility, issued April 2, 2020,
       https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-
       14-20;
   •   TEN No. 12-23, Reminder on Federal Statute of Limitations on Criminal Prosecutions of
       Unemployment Insurance (UI) Fraud, issued December 1, 2023,
       https://www.dol.gov/agencies/eta/advisories/ten-12-23; and
   •   International Union, United Auto., Aerospace, and Agric. Implement Workers of America
       v. Brock, 477 U.S. 274 (1986).

7. Attachment(s). None.