FPUC reporting instructions and state questions

CLASSIFICATION
      EMPLOYMENT AND TRAINING ADMINISTRATION              UI
                  ADVISORY SYSTEM                         CORRESPONDENCE SYMBOL
             U.S. DEPARTMENT OF LABOR                     DUIO
                Washington, D.C. 20210                    DATE
                                                          May 9, 2020

ADVISORY:       UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 15-20
                Change 1

TO:             STATE WORKFORCE AGENCIES

FROM:           JOHN PALLASCH
                Assistant Secretary

SUBJECT:        Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 – Federal
                Pandemic Unemployment Compensation (FPUC) Program Reporting Instructions
                and Questions and Answers

1. Purpose. As states have gained experience administering the FPUC program under the CARES
   Act, they have identified questions about aspects of the program’s operation. The purpose of
   this UIPL is to address those questions and provide further guidance about the FPUC program
   authorized by Section 2104 of the CARES Act, Public Law (Pub. L.) 116-136, and provide
   instructions for completing Form ETA 9178-P, Quarterly Narrative Progress Report –
   Employment and Training Supplemental Budget Request Activities.

2. Action Requested. The U.S. Department of Labor’s (Department) Employment and Training
   Administration (ETA) requests that state administrators provide the information contained in
   this Unemployment Insurance Program Letter (UIPL) and its attachment to appropriate staff.

3. Summary and Background.

   a. Summary – On March 27, 2020, the President signed into law the CARES Act, which
      includes the Relief for Workers Affected by Coronavirus Act set out in Title II, Subtitle A.
      Section 2104 of the CARES Act creates a new temporary federal program called Federal
      Pandemic Unemployment Compensation (FPUC), which provides an eligible individual with
      $600 per week in addition to the weekly benefit amount he or she receives from designated
      unemployment compensation (UC) programs, provided he or she is otherwise eligible.

   b. Background – The CARES Act was designed to mitigate the economic effects of the COVID-
      19 pandemic in a variety of ways. The coordination of programs within the CARES Act is
      discussed in UIPL No. 14-20. On April 4, 2020, the Department issued UIPL No. 15-20,
      which focuses on Section 2104 of the CARES Act authorizing the temporary FPUC program.
      FPUC provides eligible individuals $600 per week in addition to the weekly benefit amount
      they receive from the UC programs noted in Section 2104.

 RESCISSIONS                                            EXPIRATION DATE
 None                                                   Continuing

4. Questions and Answers. The Department hosted a webinar with states on April 9, 2020, to
   discuss UIPL No. 15-20, which contained key provisions and operating instructions for the
   FPUC program. A recording of this webinar is available under the “Events” section on the
   Unemployment Insurance Community of Practice on the WorkforceGPS website
   (https://ui.workforcegps.org/). The Attachment to this UIPL contains answers to certain
   questions received during the webinar and through the Department’s designated e-mail address
   on all COVID-19 related inquiries ([email protected]).

   Additionally, the Department is revising form ETA 227 (OMB 1205-0173), which is the form
   states must use to report FPUC overpayments. More information about this can be found in
   Attachment I of UIPL No. 15-20, Section H. Reporting Instructions.

5. Supplemental Budget Request Project Status Tracking. ETA will use form ETA 9178-P as
   a monitoring instrument to track a grantee’s progress towards completing project activities for
   implementation of the FPUC program which are funded under the supplemental budget
   requests. Instructions for submitting supplemental budget requests are located in section 4(c)
   of UIPL No. 15-20.

   As part of the monitoring process, grantees that receive supplemental grant awards must submit
   a Quarterly Progress Report (QPR) using the form ETA 9178-P. The form ETA 9178-P
   requires the grantee to provide ETA with narrative updates on supplemental grant activities and
   helps ensure that the grantee achieves the goals described in the supplemental grant
   applications. States that received supplemental grant awards to implement the FPUC program
   will need to submit reports as instructed. Attachments II and III in UIPL No. 16-20, Change 1,
   provide the ETA 9178-P report, the instructions for completing the report, and the timeline for
   the submission of the report.

6. Inquiries. States should direct inquiries to [email protected] and copy the appropriate
   Regional Office.

7. References.

      Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136), including
       Title II Subtitle A Relief for Workers Affected by Coronavirus Act;
      5 U.S.C. Chapter 85;
      Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. § 3304 note);
      Trade Act of 1974 (19 U.S.C. § 2291 et seq.);
      Robert T. Stafford Disaster Relief and Emergency Act (42 U.S.C. § 5121 et seq.);
      Sections 3304 and 3306(v) of the Federal Unemployment Tax Act (FUTA) (26 U.S.C. §§
       3304 and 3306(v));
      Section 303 of the Social Security Act (42 U.S.C. § 503);
      20 C.F.R. Part 603;
      ET Handbook No. 336 (18th Edition), Unemployment Insurance State Quality Service Plan
       Planning and Reporting Guidelines,
       https://wdr.doleta.gov/directives/attach/ETAHandbook/ET_Handbook_No.336_18th_Editio
       n_Change_4_acc.pdf;
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      ET Handbook No. 384, Unemployment Compensation for Ex-servicemembers,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=465;
      ET Handbook No. 391, UCFE Handbook for State Agencies,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2233;
      ET Handbook No. 401, UI Report Handbook,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7774;
      UIPL No. 05-13, Work Search and Overpayment Offset Provisions Added to Permanent
       Federal Unemployment Compensation Law by Title II, Subtitle A of the Middle Class Tax
       Relief and Job Creation Act of 2012, issued January 10, 2013,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3698;
      UIPL No. 14-20, Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 –
       Summary of Key Unemployment Insurance (UI) Provisions and Temporary Emergency
       State Staffing Flexibility, issued on April 2, 2020,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3390;
      UIPL No. 15-20, Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 –
      Federal Pandemic Unemployment Compensation (FPUC) Program Operating, Financial,
       and Reporting Instructions, issued on April 4, 2020,
       https://wdr.doleta.gov/directives/corr_doc.cfm?docn=9297; and
      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 on April 27, 2020,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=5899.

8. Attachment.

      Questions and Answers: Federal Pandemic Unemployment Compensation (FPUC) Program

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                                                  Attachment to UIPL No. 15-20, Change 1

                             Questions and Answers:
          Federal Pandemic Unemployment Compensation (FPUC) Program

A. Issuing Payments

    1. Question: Is the state required to make FPUC payments weekly?

      Answer: The state must make FPUC payments on the same schedule as the state’s
      regular UC payments. If the state pays regular UC on a bi-weekly basis, it can maintain
      that same schedule for FPUC.

    2. Question: If an individual’s UC benefits are reduced to zero because of a benefit offset,
      is the individual eligible for FPUC for the week?

      Answer: Yes. Benefit offsets are considered “payments” as the payment is still being
      made to the individual, but part of the payment is offset and used to repay the previous
      overpayment. Therefore, the individual is deemed to have received UC for the week and
      is eligible to receive FPUC for the week. The FPUC payments must also be reduced to
      recover state and federal UC overpayments; refer to questions B2 and B3 below.

    3. Question: If an individual is ineligible to receive his/her weekly benefit amount (WBA)
      for a particular week (for example, because of a disqualification or deductible income), is
      the individual eligible for the FPUC payment?

      Answer: No. The individual must be eligible to receive at least one dollar ($1) of
      underlying benefits for the claimed week to be eligible to receive the FPUC payment for
      that week.

    4. Question: Is an individual who is working part-time, or has gone back to work part-time,
      and is collecting partial UC benefits for a week eligible for FPUC?

      Answer: Yes. An individual working part-time who otherwise meets state eligibility
      requirements for the underlying benefit is eligible to receive the FPUC payment.

    5. Question: Does the additional FPUC payment affect how much a person could earn while
      working part time before a deduction is made from the weekly underlying benefit
      payment?

      Answer: No. All earnings are deducted from the underlying UC benefit payment. If an
      individual’s earnings reduce the week’s underlying benefit payment to zero, the
      individual would not be eligible for FPUC for that week.

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    6. Question: Are FPUC benefits subject to federal income tax withholding?

      Answer: Yes. Both the underlying benefit payment and the FPUC benefit payment are
      subject to federal income tax withholding. Individuals may elect to have federal
      withholding deducted from their FPUC payments separately from the withholding for the
      underlying benefit payments.

    7. Question: Is the state required to notify individuals when they receive a final FPUC
      payment?

      Answer: If the state law requires notification of the final UC payment, then states must
      notify an individual when the individual is receiving the final FPUC payment in the same
      manner as the state notifies individuals receiving the final UC payment.

B. Overpayments and Recovery

    1. Question: When is an FPUC payment considered to be overpaid?

      Answer: An FPUC payment is an overpayment any time an individual receives an FPUC
      payment for which the individual was not eligible. For example, if an individual is paid
      FPUC and the underlying UC benefit payment is subsequently denied and determined to
      be overpaid, then the FPUC payment is also overpaid. However, if an individual is
      eligible receive at least one dollar ($1) of underlying benefits for the claimed week, the
      individual is eligible to receive the FPUC payment for that week.

    2. Question: Must FPUC payments be used to offset intrastate state or federal UC
      overpayments?

      Answer: Yes. FPUC payments must be reduced to recover state and federal UC
      overpayments if the state has a cross-program offset agreement in place with the
      Secretary under Section 303(g)(2), SSA (42 U.S.C. § 503(g)(2)). However, a state may
      not offset more than 50 percent from the FPUC payment to recover overpayments for
      these unemployment benefit programs.

    3. Question: Must FPUC payments be offset to recover UC overpayments for other states?

      Answer: Yes. FPUC payments must be reduced to recover UC overpayments for other
      states if the state has signed the Interstate Reciprocal Overpayment Recovery
      Arrangement (IRORA) agreement. However, a state may not offset more than 50 percent
      from the FPUC payment to recover overpayments for other states.

    4. Question: Must the state offset both the underlying benefit payment and the FPUC
      payment to recover state or federal UC overpayments?

      Answer: Yes. Even though a state may pay both benefits at the same time, the FPUC
      payment is considered a separate benefit from the underlying benefit payment.
      Therefore, it is also subject to offsets of no more than 50 percent to repay overpayments.

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5. Question: Does the state have to offset the same percentage from the underlying benefits
   payment as the FPUC payment? For example, may the state reduce its offset to 25
   percent for the underlying benefit and still offset the 50 percent from FPUC?

   Answer: As mentioned before, the FPUC payment is a separate benefit and is also
   separately subject to offsets to repay overpayments. Therefore, a state can offset the
   underlying benefit payment based on its own law and then offset the FPUC benefit
   separately. This means a state can reduce its offset to 25 percent for the underlying
   benefit and still offset the 50 percent from FPUC. While states may not offset more than
   50 percent of the FPUC, a state can choose to offset less than 50 percent from FPUC.

6. Question: May the state suspend benefit offsets to provide relief to unemployed
   individuals?

   Answer: No. The state may not suspend benefit offsets. The Middle Class Tax Relief
   and Job Creation Act of 2012 changed the benefit offset provision from “may” to “shall”
   under both Section 3304(a)(4)(D), FUTA, and Section 303(g)(1), SSA, so federal UI law
   requires states to offset benefits.

7. Question: May the state apply its own state law waiver provisions to FPUC
   overpayments?
   Answer: Section 2104(f)(2) of the CARES Act permits the state to waive the repayment if
   the state determines that the payment of FPUC was without fault on the part of the
   individual and such repayment would be contrary to equity and good conscience. If the
   state law minimum requirements for the waiver of overpayments already require that these
   conditions be met, then the state can use its own provisions for waiver. The state is
   reminded that waiver determinations must be made on the facts and circumstance of each
   individual claim, blanket waivers are not permissible. For example, states cannot waive
   overpayment due to administrative error for a group of individuals before first assessing and
   documenting why each individual meets the state’s waiver requirements. Additionally, the
   state does not have to waive the FPUC overpayment if its law prohibits the waiver of
   overpayments.
   Failure to establish an individual’s eligibility for the regular UI programs and the Extended
   Benefit program is a conformity and substantial compliance issue and failure to establish
   eligibility for PUA or PEUC is contrary to the state’s agreement to administer the program
   and could result in termination of the agreement. States may not waive overpayments under
   the CARES Act if the state has not properly established, on an individual basis, that the
   statutory requirements for such waiver have been met.

8. Question: How should states handle prosecutions of FPUC fraud overpayments?

   Answer: Individuals who fraudulently obtain FPUC benefits are subject to prosecution
   under 18 U.S.C. § 1001, among other federal criminal statutes. States must pursue FPUC
   fraud cases in the same manner as all other federal UC fraud cases. For referrals of fraud
   cases to the U.S. Department of Labor’s Office of Inspector General (OIG), states should
   follow the guidance provided in UIPL No. 29-05.
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C. Financial Information and Reporting

    1. Question: Will FPUC benefit disbursements need to be reported on a program specific
      basis?

      Answer: Yes. Due to the magnitude of the FPUC program, there will be significant
      interest in how the FPUC benefits were spent. As such, the state must report program
      specific FPUC disbursements in the “comments” section of the ETA 2112 report as
      follows: UI $$$, UCFE $$$, UCX $$$, PEUC $$$, EB $$$, PUA $$$, Other $$$. The
      total must reconcile to amounts reported on line 42b, column F.

    2. Question: Will the funding for FPUC be included in the regular administration grant?

      Answer: No. The grant awards to states for programs under the CARES Act will be issued
      under a separate grant.

    3. Question: Will states need to provide quarterly status reporting regarding supplemental
      budget requests (SBRs) received for FPUC implementation?

      Answer: Yes. States must submit an ETA 9178-P form for SBRs received to cover
      administrative costs for FPUC implementation (See the third paragraph of Section 4 (c) of
      UIPL No. 15-20). ETA has created the ETA 9178-P report for SBR status reporting
      specifically for programs under the CARES Act. Grantees must submit form ETA 9178-P
      to their respective Federal Project Officer (FPO) within 45 days of each calendar quarter
      end date. If the due date of the report falls on a Saturday, Sunday, or holiday, the report is
      due the previous business day. The table below provides the due dates for each reporting
      quarter:

                                 Reporting                       Due
                                 Quarters                        Dates
                     January 1st – March 31st            May 15th
                     April 1st – June 30th               August 14th
                     July 1ST – September 30th           November 14th
                     October 1st – December 31st         February 14th

      Attachments II and III in UIPL No. 16-20, Change 1, provide the ETA 9178-P report, the
      instructions for completing the report, and the timeline for the submission of the report.

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