Federal reimbursement for short-time compensation during COVID-19

CLASSIFICATION
     EMPLOYMENT AND TRAINING ADMINISTRATION               Unemployment Insurance
                 ADVISORY SYSTEM                          CORRESPONDENCE SYMBOL
            U.S. DEPARTMENT OF LABOR                      OUI/DUIO
               Washington, D.C. 20210                     DATE
                                                          May 3, 2020

 ADVISORY:       UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 21-20

 TO:             STATE WORKFORCE AGENCIES

 FROM:           JOHN PALLASCH
                 Assistant Secretary

 SUBJECT:        Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 –
                 Short-Time Compensation (STC) Program Provisions and Guidance Regarding
                 100 Percent Federal Reimbursement of Certain State STC Payments.

1. Purpose. To provide states with an overview of STC program provisions in Title II, Subtitle A
   of the CARES Act, Public Law (Pub. L.) 116-136, and to provide guidance regarding 100
   percent federal reimbursement of certain state STC payments.

2. Action Requested. The U.S. Department of Labor’s (Department) Employment and Training
   Administration (ETA) requests that State Workforce Administrators provide the information in
   this Unemployment Insurance Program Letter (UIPL) and all attachments to appropriate
   program and other staff in state workforce systems as they implement the Unemployment
   Insurance (UI)-related provisions that respond to the economic effects of the Coronavirus
   Disease 2019 (COVID-19).

3. Summary and Background.

       a. Summary – On March 27, 2020, the President signed into law the CARES Act, which
          was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of
          ways. The CARES Act includes the Relief for Workers Affected by Coronavirus Act set
          out in Title II, Subtitle A. The UI-related provisions are summarized in 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 on April 2, 2020.

          Section 2108 of the CARES Act provides for temporary 100 percent federal financing of
          STC payments in a state with a STC program (as defined in section 3306(v) of the
          Federal Unemployment Tax Act (FUTA) in its law, whether that program is new or pre-
          existing. Section 2108 also makes a technical correction to section 3306(v)(6), FUTA,
          by striking “Workforce Investment Act of 1998” and inserting “Workforce Innovation
          and Opportunity Act.” Section 2109 provides for a state without a qualifying STC

   RESCISSIONS                                            EXPIRATION DATE
   None                                                   Continuing

   program in its law to enter into an agreement with the Secretary of Labor (Secretary) to
   operate a temporary federal STC program, for which the state will receive federal
   reimbursement equaling one half of the benefit costs. Section 2110 provides $100
   million in grants to support states in implementing and administering STC programs in
   their laws and promoting and enrolling employers, including conducting outreach to
   employers to promote the use of STC. Section 2111 provides that the Department will
   provide assistance and guidance to states implementing STC programs.

   This UIPL provides states with an overview of the STC program provisions in the
   CARES Act and guidance regarding 100 percent federal reimbursement of certain state
   STC payments. As explained in 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, individuals who are receiving STC payments are entitled to receive an additional
   $600 per week from the Federal Pandemic Unemployment Compensation program with
   respect to weeks of unemployment ending on or before July 31, 2020.

b. Background – The STC program (also known as “worksharing” or “shared work”) is a
   lay-off aversion program in which an employer, under a state-approved plan, reduces the
   hours for a group of workers and these workers in turn receive a reduced unemployment
   benefit payment. In the context of re-opening businesses closed temporarily by a
   pandemic, STC can also serve as a means of bringing most or all of a temporarily laid-
   off workforce back to the job, even if social-distancing measures, a decline in business,
   or other factors prevent operating at full staffing levels full time. Specifically, this
   benefit may be made available to individuals returning to work with reduced hours who
   worked for the employer prior to the temporary lay-off due to COVID-19. This program
   preserves employees’ jobs and employers’ trained workforces during a disruption to the
   firm’s regular business activity by reducing hours of work for an entire group of affected
   employees, rather than by laying off some employees while others continue to work full
   time. The STC benefit payment cushions the adverse effect of the reduction in business
   activity on workers and, by maintaining their connection to their employers, ensures that
   these workers will be available to resume prior employment when business demand
   increases.

   The Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96) included
   several STC-related provisions. UIPL No. 22-12, Short-Time Compensation Provisions
   in the Middle Class Tax Relief and Job Creation Act of 2012, issued on June 18, 2012,
   provides an overview of these provisions. UIPL No. 22-12, Change 1, issued on
   December 21, 2012, provides states with model legislative language that conforms to the
   new definition of STC in section 3306(v), FUTA (26 U.S.C. § 3306(v)). UIPL No. 22-
   12, Change 2, issued on February 7, 2014, informs states that the Secretary approved
   nine optional provisions under section 3306(v)(10), FUTA, which provide states some
   additional flexibilities regarding their STC programs. For additional information, please
   see materials on the STC landing page on WorkforceGPS at
   https://stc.workforcegps.org/.

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Employer participation in an STC program is voluntary. An employer must submit a
written plan to the state unemployment compensation (UC) agency, which is subject to
the state’s approval. The employer’s plan must specify the percentage reduction in the
workweek for affected employees and be consistent with employer obligations under
applicable federal and state laws. Employers must maintain (to the same extent as other
employees not participating in the STC program) health benefits and retirement benefits
under Sections 414(i) and (j) of the Internal Revenue Code (IRC) (26 U.S.C. §§ 414(i)
and (j)) for employees in the affected unit, despite the reduced hours. Employees must
be available for their workweek to meet the “able and available for work” requirements.

The Department addressed permissible flexibility for states under existing federal law in
response to the COVID-19 pandemic in UIPL No. 10-20, Unemployment Compensation
(UC) for Individuals Affected by the Coronavirus Disease 2019 (COVID-19), issued on
March 12, 2020. This UIPL reminded states that STC can be an important resource for
employers whose businesses temporarily decline.
The President signed the Families First Coronavirus Response Act (Pub. L. 116-127) on
March 18, 2020, which includes the Emergency Unemployment Insurance Stabilization
and Access Act of 2020 (EUISAA) set out in Division D. Section 4104 of EUISAA
required the Department to provide technical assistance and guidance to support states in
establishing, implementing, and improving employer awareness of the STC program,
however, Section 4104 of EUISAA was repealed and superseded by Section 2111 of the
CARES Act.

Importance of Program Integrity. The programs and provisions in the CARES Act
operate in tandem with the fundamental eligibility requirements of the federal-state UI
program, which remain in force. In addition, some of the CARES Act programs include
new eligibility requirements that states will need to apply. For example, individuals are
only entitled to benefits if they are no longer working through no fault of their own, and
are able and available to work.

States play a fundamental role in ensuring the integrity of the UI program. While states
have been provided some flexibilities as a result of COVID-19, those flexibilities are
generally limited to dealing with the effects of COVID-19, as discussed in UIPL Nos.
10-20 and 13-20. States must ensure that individuals only receive benefits in accordance
with the statutory provisions in the CARES Act. Further, quitting work without good
cause to obtain benefits under the regular UC program or any other UI program,
including those authorized in the CARES Act, is fraud.

The Department is actively working with states receiving funding under the CARES Act
to provide benefits only to those who are entitled to such benefits. The Department will
also be actively engaged with its Office of the Inspector General (OIG) to ensure
program integrity. The Act includes an appropriation of $26 million to the Department’s
OIG to carry out audits, investigations, and other oversight activities related to states’
adherence to existing UI laws and policies, as well as to the provisions of the CARES
Act.
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4. Temporary 100 Percent Federal Financing of Certain STC Payments in States with
   Programs in Law.

   A. In General. Section 2108 of the CARES Act provides for 100 percent federal
      reimbursement of a state’s STC benefit costs if the state’s STC law conforms to the program
      definition in Section 3306(v), FUTA (26 U.S.C. § 3306(v)). A reimbursement is available
      for weeks of unemployment beginning on or after the date of enactment of the CARES Act
      (March 27, 2020) and ending on or before December 31, 2020.

      If a state, which does not already operate an STC program, enacts a law providing for the
      payment of STC under a program that meets the definition in section 3306(v), FUTA (26
      U.S.C. § 3306(v)), the state will be eligible for reimbursement of STC payments made with
      respect to weeks of unemployment beginning on or after the effective date of such
      enactment, through weeks of unemployment ending on or before December 31, 2020.

      To qualify for reimbursement of STC costs paid under state law pursuant to Section 2108 of
      the CARES Act, the state’s STC program is not required to be permanent. However, a state
      will not be eligible for an STC grant under Section 2110 of the CARES Act if its STC law is
      subject to discontinuation.

   B. Limitations on Reimbursement. Section 2108(a)(3) of the CARES Act sets out two
      limitations on reimbursement of state STC costs. First, no reimbursement will be made
      when STC is paid to an individual during a benefit year in an amount that exceeds 26 times
      the amount of regular UC (including dependents’ allowances) payable for a week of total
      unemployment to such individual.

      Second, no reimbursement will be made for payment of STC if the individual is employed
      by the employer on a seasonal, temporary, or intermittent basis, as defined under state law.
      This limitation does not include individuals normally employed on a part-time basis whose
      hours are reduced under an STC plan.

      Consistent with UIPL No. 22-12, if state law does not include definitions of these terms,
      states will use the following definitions for purposes of determining which state STC
      benefits are subject to 100 percent federal reimbursement:

      Seasonal Employment: Employment with an employer that experiences at least a 20 percent
      difference between its highest level of employment during a particular season and its lowest
      level of employment during the off-season in each of the previous three years as reported to
      the state agency, and/or employment on a temporary basis by an employer that needs extra
      help during a particular season (e.g., holiday season, summer season, etc.).

      Temporary Employment: Employment wherein an employee is expected to remain in a
      position for only a limited period of time and/or is hired by a temporary agency to fill a gap
      for a limited period of time in an employer’s workforce.

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   Intermittent Employment: Employment that is not continuous but may consist of periodic
   intervals of weekly work and intervals of no weekly work.

C. Charging of Federally Reimbursed STC Benefits. State laws provide for the financing of
   UC payments, including STC, in two ways: (i) experience rated state unemployment taxes,
   and (ii) for certain employers only, reimbursement of benefit costs (payment in lieu of
   contributions) attributable to service with the employer. States typically would be required
   to charge STC benefit costs because employers participating in state STC programs are
   directly causing unemployment (or STC payments are attributable to service with the
   employer) by reducing the hours their employees work. However, because the associated
   STC costs are being 100 percent reimbursed by the federal government, the state may (if
   permissible under state law) choose not to charge (or not to require payment in lieu of
   contributions) for STC payments that are subject to 100 percent reimbursement by the
   federal government. When the 100 percent federal reimbursement ends, states must resume
   applying their charging provisions to STC payments.

   The federal government will not reimburse states for payments of STC in excess of 26 times
   the amount of regular compensation payable for a week of total unemployment, or to
   individuals employed by a participating employer on a seasonal, temporary, or intermittent
   basis. Accordingly, the state must, consistent its own state laws, charge the employer (or
   require payment in lieu of contributions) for such benefit amounts, or, if the state determines
   it is appropriate, relieve employers from charging (or from making payments in lieu of
   contributions) if permissible under its state law. Note that the $600 FPUC payment on top of
   the STC benefits is not considered when calculating payments for STC in excess of 26 times
   the amount of regular compensation payable for a week of total unemployment for purposes
   of the amount of the federal reimbursement.

   When considering whether or not to relieve employers from charging (or making payments
   in lieu of contributions) if permissible under state law, states should take into consideration
   the potential effect on the solvency of their accounts in the Unemployment Trust Fund
   (UTF) and, for states that are receiving advances to pay benefits, the additional advances and
   associated interest payments that may result. In addition, as the schedule of state
   unemployment tax rates that is effective in a year is typically based on the balances in states’
   accounts in the UTF, states should be mindful that this decision may also impact the
   schedule of taxes that becomes effective in any given year.

   If states charge (or require payment in lieu of contributions) STC benefits, they must apply
   the provisions of state law for regular UC to all charges (and payment in lieu of
   contributions).

D. Agreement with the Department. To receive reimbursement pursuant to Section 2108 of
   the CARES Act, each qualifying state must enter into a new agreement with the Secretary
   that describes the responsibilities of the parties. The agreement is included as Attachment II
   of this UIPL. This agreement may be signed by the appropriate state official with authority
   under state law to enter into an agreement with the Department. The date the agreement is
   signed does not impact the beginning of the period of time for which reimbursement will be
   made available, though it does determine when the first payment will be accessible in the
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   Payment Management System (PMS) for a state’s drawdown. Reimbursements are available
   for weeks of unemployment beginning on or after the date of enactment of the CARES Act
   (March 27, 2020) or the effective date of a state enactment of an STC program if one did not
   exist prior to the enactment of the CARES Act and ending on or before December 31, 2020.

   Each state entering into an agreement with the Department will receive a Notice of
   Award (NOA) from the ETA Grant Officer for funding received as reimbursement for
   eligible STC payments made under state law through the Fiscal Year (FY) 2020 Annual
   Funding Agreement for the Unemployment Compensation (UC) programs covered
   under provisions of Subtitle A of Title II of the CARES Act.

   States planning to enter into an agreement for reimbursement of state STC benefit costs may
   contact the appropriate Regional Office to request a copy of the agreement that has been
   signed by the Assistant Secretary for Employment and Training before obtaining signatures
   from the appropriate state officials. The agreement signed by both parties must be submitted
   via email to the following address: [email protected].

E. Termination of Agreement. Either party, upon 30 days’ written notice, may terminate this
   agreement. The Department also reserves the right to terminate this agreement if it
   determines that the state does not perform all of the functions and duties under the agreement
   in accordance with Section 2108 of the CARES Act, the terms of the agreement, operating
   instructions, and/or guidance issued by the Department. If the agreement is terminated, no
   federal reimbursement of state STC payment may be made with respect to weeks of
   unemployment that begin after the date the termination of the agreement is effective.
   However, federal reimbursement of state STC payments is available with respect to weeks of
   unemployment ending on or before such termination date.

F. Processing Financial Transactions. Eligible reimbursements for state STC benefit costs
   under Section 2108 of the CARES Act will be provided to each qualifying state on a
   monthly basis. At the beginning of each month, estimated state STC benefit payments
   eligible for reimbursement, taking into account surpluses or shortfalls from prior months’
   allocations, will be made available in the PMS for state drawdown. After the agreement
   discussed in subsection E is signed, the first payment will be made available in the PMS in
   an amount equal to the estimated eligible state STC benefit payments for weeks of
   unemployment beginning on or after the date of enactment (March 27, 2020) through the
   month following the month in which this guidance is issued.

   Estimates for eligible amounts needed for any month will generally be equal to state STC
   amounts eligible for reimbursement in the most recent month for which data are reported on
   the ETA 5159 report, adjusted for any excess or shortfall provided in prior months for which
   actual data available are above or below that month’s allocation. The Grant Officer will
   assign a separate line on the UC program NOA allowing for issuance of obligational
   authority for state STC benefit funds, and a separate sub-account for STC will be established
   in the PMS for states to drawdown reimbursements of state STC benefit funds. This will
   function identically to benefit funding for Trade Readjustment Assistance and Wage
   Insurance benefits.

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       Funds should be withdrawn from the PMS as needed, in compliance with Cash Management
       Improvement Act of 1990 (CMIA) requirements, to meet state STC benefit expenses. Any
       deposits to state accounts in the UTF of previously disbursed STC benefits eligible for
       federal reimbursement should be communicated to the Bureau of Public Debt as a credit to
       “State UI Withdrawal.” An offsetting reduction to “net UI [unemployment insurance]
       Benefits” reported on the ETA 2112, line 31, column F should accompany such credits. This
       would effectively reverse the state transactions involving funds previously withdrawn and
       disbursed for STC benefits.

   G. Reporting. The ETA 5159 report for STC has one additional cell that must be reported.
      This cell describes the number of employers with STC agreements (Section D cell C10,
      Number of Participating Employers). Enter the total number of employers who have entered
      into agreements with the state that would provide for potential STC benefit payments to
      claimants. If a single employer has multiple agreements with the state, or multiple
      agreements within an establishment, count that employer only once.

       Each state recipient of STC reimbursement funding must submit a Quarterly Financial
       Report (ETA 9130) containing information on obligations and expenditures of such funds.

5. Temporary Federal STC Programs Operated Under Agreement with Secretary. Section
   2109 of the CARES Act permits a state that does not have the statutory authority to operate an
   STC program under its law to enter into an agreement with the Secretary to operate a temporary
   federal STC program, which provides federal benefits as opposed to state funded benefits, that
   conforms to the requirements in section 3306(v), FUTA (26 U.S.C. § 3306(v)). An agreement to
   operate a temporary federal STC program applies to weeks of unemployment beginning on or
   after the date of the signed agreement. Authority to operate the temporary federal STC program
   expires on December 31, 2020. The state or the Department may terminate the agreement with
   30 days’ advance written notice. If an STC program is later implemented under state law, the
   state will no longer be eligible for reimbursements of benefits paid under the federal STC
   program with respect to weeks of unemployment beginning after the effective date of the law
   authorizing the state STC program.

   Under the temporary federal program, employer participation is voluntary. Under a temporary
   federal STC program agreement, STC payments to an individual in a benefit year may not
   exceed 26 times the amount of regular UC payable for a week of total unemployment to such
   individual. In addition, an STC plan approved by a state operating a temporary federal STC
   program cannot provide STC payments to individuals employed on a seasonal, temporary, or
   intermittent basis.

   Employers are required to pay the state an amount equal to one-half of the STC benefits paid to
   their employees who participate in the temporary federal STC program. The amounts collected
   from employers under this program must be deposited in the state’s unemployment fund and
   may not be used for calculating the employer’s contribution rate. Because this payment by the
   employer is a reimbursement for federal STC benefits, it may not be credited to the employer’s
   reserve or applied as a voluntary contribution.

                                                7

   The federal government will reimburse the state for the remaining one-half of federal STC
   benefit costs and for all administrative expenses associated with operating this federal STC
   program.

   Additional guidance providing operating instructions for this program is forthcoming. States
   interested in operating a temporary STC federal program may contact the appropriate ETA
   Regional Office to initiate discussions about the requirements.

6. Grants for State STC Programs. Section 2110 of the CARES Act provides up to $100 million
   for grants to states with STC programs in their laws that conform to the requirements of section
   3306(v), FUTA (26 U.S.C. § 3306(v)). Grants are available for the implementation or improved
   administration of an STC program, and for promotion and enrollment of employers in an STC
   program. The Secretary may use up to 0.25 percent of the $100 million to provide outreach and
   share best practices of STC programs. The deadline to apply for these grants is December 31,
   2023.

   Each state’s share of the STC grants is calculated as provided under Section 2110(b)(1) of the
   CARES Act:

       [To] be equal to the amount obtained by multiplying $100,000,000 (less the
       amount used by the Secretary under subsection (e)) by the same ratio as would
       apply under subsection (a)(2)(B) of section 903 of the Social Security Act (42
       U.S.C. 1103) for purposes of determining such State’s share of any excess amount
       (as described in subsection (a)(1) of such section) that would have been subject to
       transfer to State accounts, as of October 1, 2019, under the provisions of
       subsection (a) of such section.

   This means each state’s share is based on its proportionate share of FUTA taxable wages
   multiplied by the $100,000,000 (less up to 0.25 percent). Attachment III contains a table of each
   state’s potential share of the STC grant.

   One-third of a state’s share is available for grants for implementation or improved
   administration of an STC program. The remaining two-thirds of a state’s share is available for
   grants for the promotion and enrollment of employers in a conforming STC program.

   A state whose UC law is not certified under Section 3304, FUTA (26 U.S.C. § 3304), or under
   Section 303, SSA (42 U.S.C. § 503), is not eligible to receive a grant. Also, to qualify for a
   grant, a state’s STC program may not be subject to discontinuation. If a state has a new STC
   enactment, it must be effective within 12 months of the date of the Secretary’s certification to
   the Treasury for transfer of grant funds to the state’s account in the UTF.

   States will be notified within 30 days of receipt of a complete application whether they have
   been approved for a grant. If approved, the Secretary of Treasury will transfer the grant amount
   to the state’s account in the UTF within seven days of receipt of the Department’s certification.

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   The Secretary will recoup any grant awarded to a state if during the five-year period beginning
   after the first date a grant was awarded to the state, the state terminates its STC program or fails
   to meet the requirements regarding the STC program.

   Additional guidance about these grants, including the eligibility criteria and application
   requirements, is forthcoming. States must submit applications to the Secretary at such time and
   in such manner and form as the Secretary may require. States interested in applying for STC
   grants may contact the appropriate ETA Regional Office to initiate discussions about the
   requirements.

7. Assistance and Guidance in Implementing Programs. Section 2111 of the CARES Act
   requires the Secretary to assist states in establishing and implementing STC programs that
   conform to the requirements of section 3306(v), FUTA (26 U.S.C. § 3306(v)). This includes:
   1) developing model legislative language or disseminating existing model legislative language
   that may be used by states to enact such programs; 2) providing technical assistance and
   guidance in developing, enacting, and implementing such programs; and 3) establishing
   reporting requirements for states, including the number of estimated averted layoffs, and the
   number of participating employers and workers.

   This model legislative language and guidance must allow sufficient flexibility by states and
   participating employers while ensuring accountability and program integrity. In addition, the
   Secretary must consult with employers, labor organizations, state workforce agencies, and other
   program experts regarding the model legislative language and guidance if prior model legislative
   language had not been developed through such a consultative process.

   In 2012, the Department developed model legislative language through a consultative process
   which also satisfies the requirement to issue model legislation in the CARES Act. UIPL No. 22-
   12 provides information about the Department’s consultations with employers, labor
   organizations, state workforce agencies, and other program experts about STC model legislative
   language, guidance, and reporting. UIPL No. 22-12, Change 1 provides model legislative
   language for states to use for their STC programs, which includes some optional provisions that
   offer states flexibility and an opportunity to improve program integrity. UIPL No. 22-12,
   Change 2 provides states additional options for their STC programs. States interested in
   amending their laws to provide for an STC program should review the model legislative
   language and optional provisions in these UIPLs. Links to these UIPLs are provided in the
   References section below. In addition, states may contact the appropriate ETA Regional Office
   to initiate discussions about the requirements of section 3306(v), FUTA, and any additional
   permissible flexibilities they may be considering for their STC programs.

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

9. 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;

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      Families First Coronavirus Response Act, Pub. L. 116-127, including Division D Emergency
       Unemployment Insurance Stabilization and Access Act of 2020 (EUISAA);
      Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96;
      Sections 3303(a), 3306(v), and 3309(a), Federal Unemployment Tax Act (FUTA) (26 U.S.C.
       §§ 3303, 3306, and 3309);
      Sections 303 and 903(a), Social Security Act (SSA) (42 U.S.C. §§ 503 and 1103);
      Sections 414(i) and (j), Internal Revenue Code (IRC) (26 U.S.C. § 414);
      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;
      UIPL No. 14-20, Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 –
       Summary of Key Unemployment Insurance (UI) Provisions Regarding Temporary
       Emergency State Staffing Flexibility, issued on April 2, 2020,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3390;
      UIPL No. 13-20, Families First Coronavirus Response Act, Division D Emergency
       Unemployment Insurance Stabilization and Access Act of 2020, issued on March 22, 2020,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=8634;
      UIPL No. 10-20, Unemployment Compensation (UC) for Individuals Affected by the
       Coronavirus Disease 2019 (COVID-19), issued on March 12, 2020,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=8893;
      UIPL No. 22-12, Change 2, Short-Time Compensation Provisions in the Middle Class Tax
       Relief and Job Creation Act of 2012, issued on February 7, 2014,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7832;
      UIPL No. 22-12, Change 1, Short-Time Compensation Provisions in the Middle Class Tax
       Relief and Job Creation Act of 2012, issued on December 21, 2012,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=5754; and
      UIPL No. 22-12, Short-Time Compensation Provisions in the Middle Class Tax Relief and
       Job Creation Act of 2012, issued on June 18, 2012,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=9382.

10. Attachments.

   Attachment I    Statutory Language of Title II, Subtitle A, Sections 2108-2111 of the
                   Coronavirus Aid, Relief, and Economic Security (CARES) Act;
   Attachment II   Text of Agreement
   Attachment III Grants for STC Programs – Amount

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                                                                   Attachment I to UIPL No. 21-20

Statutory Language of Title II, Subtitle A, Sections 2108-2111 of the Coronavirus Aid, Relief,
                           and Economic Security (CARES) Act

         Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

  TITLE II--ASSISTANCE FOR AMERICAN WORKERS, FAMILIES, AND
                              BUSINESSES
              Subtitle A--Unemployment Insurance Provisions

SEC. 2108. TEMPORARY FINANCING OF SHORT-TIME COMPENSATION PAYMENTS
IN STATES WITH PROGRAMS IN LAW.
   (a) Payments to States.--
      (1) In general.--Subject to paragraph (3), there shall be paid to a State an amount equal to 100
percent of the amount of short-time compensation paid under a short-time compensation program
(as defined in section 3306(v) of the Internal Revenue Code of 1986) under the provisions of the
State law.
      (2) Terms of payments.--Payments made to a State under paragraph (1) shall be payable by
way of reimbursement in such amounts as the Secretary estimates the State will be entitled to
receive under this section for each calendar month, reduced or increased, as the case may be, by any
amount by which the Secretary finds that the Secretary’s estimates for any prior calendar month
were greater or less than the amounts which should have been paid to the State. Such estimates may
be made on the basis of such statistical, sampling, or other method as may be agreed upon by the
Secretary and the State agency of the State involved.
      (3) Limitations on payments.--
         (A) General payment limitations.--No payments shall be made to a State under this section
for short-time compensation paid to an individual by the State during a benefit year in excess of 26
times the amount of regular compensation (including dependents’ allowances) under the State law
payable to such individual for a week of total unemployment.
         (B) Employer limitations.--No payments shall be made to a State under this section for
benefits paid to an individual by the State under a short-time compensation program if such
individual is employed by the participating employer on a seasonal, temporary, or intermittent basis.
   (b) Applicability.--Payments to a State under subsection (a) shall be available for weeks of
unemployment--
      (1) beginning on or after the date of the enactment of this Act; and
      (2) ending on or before December 31, 2020.
   (c) New Programs.--Subject to subsection (b)(2), if at any point after the date of the enactment of
this Act the State enacts a State law providing for the payment of short-time compensation under a
short-time compensation program that meets the definition of such a program under section 3306(v)
of the Internal Revenue Code of 1986, the State shall be eligible for payments under this section
after the effective date of such enactment.
   (d) Funding and Certifications.--

                                                 I-1

     (1) Funding.--There are appropriated, out of moneys in the Treasury not otherwise
appropriated, such sums as may be necessary for purposes of carrying out this section.
     (2) Certifications.--The Secretary shall from time to time certify to the Secretary of the
Treasury for payment to each State the sums payable to such State under this section.
  (e) Definitions.--In this section:
     (1) Secretary.--The term “Secretary” means the Secretary of Labor.
     (2) State; state agency; state law.--The terms “State”, “State agency”, and “State law” have the
meanings given those terms in section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970 (26 U.S.C. 3304 note).
  (f) Technical Correction to Definition.--Section 3306(v)(6) of the Internal Revenue Code of 1986
(26 U.S.C. 3306) is amended by striking “Workforce Investment Act of 1998”' and inserting
“Workforce Innovation and Opportunity Act”.

SEC. 2109. TEMPORARY FINANCING OF SHORT-TIME COMPENSATION
AGREEMENTS.
   (a) Federal-State Agreements.--
      (1) In general.--Any State which desires to do so may enter into, and participate in, an
agreement under this section with the Secretary provided that such State’s law does not provide for
the payment of short-time compensation under a short-time compensation program (as defined in
section 3306(v) of the Internal Revenue Code of 1986).
      (2) Ability to terminate.--Any State which is a party to an agreement under this section may,
upon providing 30 days’ written notice to the Secretary, terminate such agreement.
   (b) Provisions of Federal-State Agreement.--
      (1) In general.--Any agreement under this section shall provide that the State agency of the
State will make payments of short-time compensation under a plan approved by the State. Such plan
shall provide that payments are made in accordance with the requirements under section 3306(v) of
the Internal Revenue Code of 1986.
      (2) Limitations on plans.--
         (A) General payment limitations.--A short-time compensation plan approved by a State shall
not permit the payment of short-time compensation to an individual by the State during a benefit
year in excess of 26 times the amount of regular compensation (including dependents’ allowances)
under the State law payable to such individual for a week of total unemployment.
         (B) Employer limitations.--A short-time compensation plan approved by a State shall not
provide payments to an individual if such individual is employed by the participating employer on a
seasonal, temporary, or intermittent basis.
      (3) Employer payment of costs.--Any short-time compensation plan entered into by an
employer must provide that the employer will pay the State an amount equal to one-half of the
amount of short-time compensation paid under such plan. Such amount shall be deposited in the
State's unemployment fund and shall not be used for purposes of calculating an employer’s
contribution rate under section 3303(a)(1) of the Internal Revenue Code of 1986.
   (c) Payments to States.--
      (1) In general.--There shall be paid to each State with an agreement under this section an
amount equal to--
         (A) one-half of the amount of short-time compensation paid to individuals by the State
pursuant to such agreement; and
         (B) any additional administrative expenses incurred by the State by reason of such
agreement (as determined by the Secretary).
                                                   I-2

      (2) Terms of payments.--Payments made to a State under paragraph (1) shall be payable by
way of reimbursement in such amounts as the Secretary estimates the State will be entitled to
receive under this section for each calendar month, reduced or increased, as the case may be, by any
amount by which the Secretary finds that the Secretary’s estimates for any prior calendar month
were greater or less than the amounts which should have been paid to the State. Such estimates may
be made on the basis of such statistical, sampling, or other method as may be agreed upon by the
Secretary and the State agency of the State involved.
      (3) Funding.--There are appropriated, out of moneys in the Treasury not otherwise
appropriated, such sums as may be necessary for purposes of carrying out this section.
      (4) Certifications.--The Secretary shall from time to time certify to the Secretary of the
Treasury for payment to each State the sums payable to such State under this section.
   (d) Applicability.--An agreement entered into under this section shall apply to weeks of
unemployment--
      (1) beginning on or after the date on which such agreement is entered into; and
      (2) ending on or before December 31, 2020.
   (e) Special Rule.--If a State has entered into an agreement under this section and subsequently
enacts a State law providing for the payment of short-time compensation under a short-time
compensation program that meets the definition of such a program under section 3306(v) of the
Internal Revenue Code of 1986, the State--
      (1) shall not be eligible for payments under this section for weeks of unemployment beginning
after the effective date of such State law; and
      (2) subject to section 2108(b)(2), shall be eligible to receive payments under section 2108 after
the effective date of such State law.
   (f) Definitions.--In this section:
      (1) Secretary.--The term “Secretary” means the Secretary of Labor.
      (2) State; state agency; state law.--The terms “State”, “State agency”, and “State law” have the
meanings given those terms in section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970 (26 U.S.C. 3304 note).

SEC. 2110. GRANTS FOR SHORT-TIME COMPENSATION PROGRAMS.
   (a) Grants.--
      (1) For implementation or improved administration.--The Secretary shall award grants to States
that enact short-time compensation programs (as defined in subsection (i)(2)) for the purpose of
implementation or improved administration of such programs.
      (2) For promotion and enrollment.--The Secretary shall award grants to States that are eligible
and submit plans for a grant under paragraph (1) for such States to promote and enroll employers in
short-time compensation programs (as so defined).
      (3) Eligibility.--
         (A) In general.--The Secretary shall determine eligibility criteria for the grants under
paragraphs (1) and (2).
         (B) Clarification.--A State administering a short-time compensation program that does not
meet the definition of a short-time compensation program under section 3306(v) of the Internal
Revenue Code of 1986, and a State with an agreement under section 2109, shall not be eligible to
receive a grant under this section until such time as the State law of the State provides for payments
under a short-time compensation program that meets such definition and such law.
   (b) Amount of Grants.--

                                                  I-3

      (1) In general.--The maximum amount available for making grants to a State under paragraphs
(1) and (2) shall be equal to the amount obtained by multiplying $100,000,000 (less the amount used
by the Secretary under subsection (e)) by the same ratio as would apply under subsection (a)(2)(B)
of section 903 of the Social Security Act (42 U.S.C. 1103) for purposes of determining such State’s
share of any excess amount (as described in subsection (a)(1) of such section) that would have been
subject to transfer to State accounts, as of October 1, 2019, under the provisions of subsection (a) of
such section.
      (2) Amount available for different grants.--Of the maximum incentive payment determined
under paragraph (1) with respect to a
   State--
         (A) one-third shall be available for a grant under subsection (a)(1); and
         (B) two-thirds shall be available for a grant under subsection (a)(2).
   (c) Grant Application and Disbursal.--
      (1) Application.--Any State seeking a grant under paragraph (1) or (2) of subsection (a) shall
submit an application to the Secretary at such time, in such manner, and complete with such
information as the Secretary may require. In no case may the Secretary award a grant under this
section with respect to an application that is submitted after December 31, 2023.
      (2) Notice.--The Secretary shall, within 30 days after receiving a complete application, notify
the State agency of the State of the Secretary’s findings with respect to the requirements for a grant
under paragraph (1) or (2) (or both) of subsection (a).
      (3) Certification.--If the Secretary finds that the State law provisions meet the requirements for
a grant under subsection (a), the Secretary shall thereupon make a certification to that effect to the
Secretary of the Treasury, together with a certification as to the amount of the grant payment to be
transferred to the State account in the Unemployment Trust Fund (as established in section 904(a) of
the Social Security Act (42 U.S.C. 1104(a))) pursuant to that finding. The Secretary of the Treasury
shall make the appropriate transfer to the State account within 7 days after receiving such
certification.
      (4) Requirement.--No certification of compliance with the requirements for a grant under
paragraph (1) or (2) of subsection
   (a) may be made with respect to any State whose--
         (A) State law is not otherwise eligible for certification under section 303 of the Social
Security Act (42 U.S.C. 503) or approvable under section 3304 of the Internal Revenue Code of
1986; or
         (B) short-time compensation program is subject to discontinuation or is not scheduled to take
effect within 12 months of the certification.
   (d) Use of Funds.--The amount of any grant awarded under this section shall be used for the
implementation of short-time compensation programs and the overall administration of such
programs and the promotion and enrollment efforts associated with such programs, such as through-
-
      (1) the creation or support of rapid response teams to advise employers about alternatives to
layoffs;
      (2) the provision of education or assistance to employers to enable them to assess the feasibility
of participating in short-time compensation programs; and
      (3) the development or enhancement of systems to automate--
         (A) the submission and approval of plans; and
         (B) the filing and approval of new and ongoing short-time compensation claims.

                                                  I-4

   (e) Administration.--The Secretary is authorized to use 0.25 percent of the funds available under
subsection (g) to provide for outreach and to share best practices with respect to this section and
short-time compensation programs.
   (f) Recoupment.--The Secretary shall establish a process under which the Secretary shall recoup
the amount of any grant awarded under paragraph (1) or (2) of subsection (a) if the Secretary
determines that, during the 5-year period beginning on the first date that any such grant is awarded
to the State, the State--
      (1) terminated the State’s short-time compensation program; or
      (2) failed to meet appropriate requirements with respect to such program (as established by the
Secretary).
   (g) Funding.--There are appropriated, out of moneys in the Treasury not otherwise appropriated,
to the Secretary, $100,000,000 to carry out this section, to remain available without fiscal year
limitation.
   (h) Reporting.--The Secretary may establish reporting requirements for States receiving a grant
under this section in order to provide oversight of grant funds.
   (i) Definitions.--In this section:
      (1) Secretary.--The term “Secretary” means the Secretary of Labor.
      (2) Short-time compensation program.--The term “short-time compensation program” has the
meaning given such term in section 3306(v) of the Internal Revenue Code of 1986.
      (3) State; state agency; state law.--The terms “State”, “State agency”, and “State law” have the
meanings given those terms in section 205 of the Federal-State Extended Unemployment
Compensation Act of 1970 (26 U.S.C. 3304 note).

SEC. 2111. ASSISTANCE AND GUIDANCE IN IMPLEMENTING PROGRAMS.
   (a) In General.--In order to assist States in establishing, qualifying, and implementing short-time
compensation programs (as defined in section 3306(v) of the Internal Revenue Code of 1986), the
Secretary of Labor (in this section referred to as the “Secretary”) shall--
      (1) develop model legislative language, or disseminate existing model legislative language,
which may be used by States in developing and enacting such programs, and periodically review
and revise such model legislative language;
      (2) provide technical assistance and guidance in developing, enacting, and implementing such
programs; and
      (3) establish reporting requirements for States, including reporting on--
         (A) the number of estimated averted layoffs;
         (B) the number of participating employers and workers; and
         (C) such other items as the Secretary of Labor determines are appropriate.
   (b) Model Language and Guidance.--The model language and guidance developed under
subsection (a) shall allow sufficient flexibility by States and participating employers while ensuring
accountability and program integrity.
   (c) Consultation.--In developing the model legislative language and guidance under subsection
(a), and in order to meet the requirements of subsection (b), the Secretary shall consult with
employers, labor organizations, State workforce agencies, and other program experts. Existing
model legislative language that has been developed through such a consultative process shall be
deemed to meet the consultation requirement of this subsection.
   (d) Repeal.--Section 4104 of the Emergency Unemployment Stabilization and Access Act of 2020
(contained in division D of the Families First Coronavirus Response Act) is repealed.

                                                  I-5

                                                            Attachment II to UIPL No. 21-20

                                       Text of Agreement

                 Relief for Workers Affected by Coronavirus Act

                  100 Percent Reimbursement of Short-Time
               Compensation Benefit Costs Paid Under State Law

                                AGREEMENT BETWEEN

                  THE STATE OF                                                 AND

               THE SECRETARY OF LABOR, U.S. DEPARTMENT OF
                                 LABOR

The Secretary of Labor, U.S. Department of Labor, and the State of
                                   , in order to carry out the provisions of Section 2108 of
Subtitle A of Title II of the Coronavirus Aid, Relief, and Economic Security Act (Pub. L.
116-136), hereinafter referred to as the “Act,” hereby agree as follows:

       I.   The State Workforce Agency, hereinafter referred to as the “Agency,” will
       make payments of Short-Time Compensation (STC) benefits in accordance with
       the Act (which is incorporated herein by reference) under an STC program as
       defined in section 3306(v) of the Internal Revenue Code of 1986 under the
       provisions of the State law, and will cooperate with the U.S. Department of Labor
       (Department), and with other state agencies in making such payments.

       II. The Agency and other appropriate state officials will perform all of the
       functions and duties undertaken under this Agreement in accordance with the
       terms of this Agreement, the operating instructions, and guidance issued by the
       Department.

       III. The Agency will maintain such records pertaining to the administration of
       the Act as the Department requires, and will make all such records available for
       inspection, examination, and audit at such time and by such Federal officials or
       employees as the Department may designate or as may be required by law.
       IV.   The Agency will furnish to the Department or its agents such information

                                             II-1

and reports, and will fully participate in any studies or evaluations the Department
determines are necessary or appropriate for carrying out the purposes of the Act.
V. The Department will make available in the Payment Management System an
amount equal to 100 percent of the estimated amount needed by the state for
payment of STC eligible for Federal reimbursement during that month, adjusted
for any excess or shortfall in amounts provided in any prior month starting with
weeks of unemployment beginning on or after March 27, 2020. The first payment
to the state will be made available after the state signs this agreement and the
Fiscal Year (FY) 2020 Annual Funding Agreement for the Unemployment
Compensation (UC) programs covered under provisions of Subtitle A of Title II of
the Coronavirus Aid, Relief, and Economic Security Act, in an amount equal to
the estimated state STC payments from the date of enactment through the month
following the month in which STC guidance is issued, based on state STC
payments as reported on the ETA 5159. At the beginning of each month
thereafter, the estimated amounts needed for payment of eligible state STC to be
made available will generally be equal to eligible state STC amounts paid in the
most recent month for which data are reported, adjusted for any excess or shortfall
in amounts provided in prior months.

In making STC payments, the Agency agrees that:

      a. No payments shall be made to the Agency for STC paid to any
         individual in excess of 26 times the amount of regular compensation
         (including dependents’ allowances) under the state law payable to the
         individual for a week of total unemployment.

      b. No payments shall be made to the Agency for benefits paid to any
         individual by the Agency under an STC program if such individual is
         employed by the participating employer on a seasonal, temporary, or
         intermittent basis.

      c. No payments shall be made to the Agency under an STC program for
         weeks of unemployment ending after December 31, 2020, or a later
         date, if provided for in any subsequent amendments to section 2108 of
         the Act.

VI. The Agency will use all funds paid to the state for the payment of benefits
solely for the purpose of STC. The Agency will return to the United States
Treasury, upon request of the Department, any such funds (a) if the Department
finds that the funds were not needed for such purpose or that the funds have been
used for a purpose other than that for which they were intended, or (b) upon
termination of this agreement. The "Audit Requirements for Grants, Contracts, and
other Agreements," 29 CFR 96, will apply to disagreements under this section.

                                     II-2

VII. The Agency will take such action as reasonably may be necessary to recover
for the account of the United States all benefit amounts improperly paid and
restore any lost or misapplied funds paid to the state for benefits or the
administration of this Agreement.

VIII. The Agency will apply the methods of administration required by Section
303(a)(l) of the Social Security Act (42 U.S.C. 503(a)(l)) to the functions
undertaken under this Agreement.

IX. This Agreement may be terminated by either party on thirty days written
notice. If this Agreement is terminated, the Agency will process and pay benefits
for all weeks of unemployment, which end before the date of termination for
which such payments are due.

X. This Agreement shall be effective with respect to weeks of unemployment
beginning on or after the date of enactment of the Act (March 27, 2020) after
both parties have signed it or, if later, the date the State law meeting the
requirements of section 3306(v) of the Internal Revenue Code of 1986, becomes
effective.

                                    II-3

                                                   _________________________         ______
                                                   John P. Pallasch                  Date
                                                   Assistant Secretary for
                                                   Employment and Training
                                                   U.S. Department of Labor

 By
                    (State Signatory)

                         (Title)

 DATED:

 For the State of

CERTIFICATION OF AUTHORITY

NAME:____________________________________

TITLE:____________________________________

I hereby certify that the above-named person has the authority under the Constitution and
laws of this state to sign this Agreement on behalf of the state.

       _______________________________________
                                    Signature
       _______________________________________
                                    Title

       _______________________________________
       Date

                                            II-4

                                                      Attachment III to UIPL No. 21-20
                    Grants for STC Programs – Amounts

       STATE           Short Time Compensation
                              Distribution             33% share     66% share
Alaska                                      208,491         69,497       138,994
Alabama                                   1,269,971        423,324       846,647
Arkansas                                    799,283        266,428       532,855
Arizona                                   1,909,689        636,563     1,273,126
California                               11,767,738      3,922,579     7,845,159
Colorado                                  2,017,781        672,594     1,345,187
Connecticut                               1,187,842        395,947       791,895
Dist. of Columbia                           431,513        143,838       287,675
Delaware                                    305,339        101,780       203,559
Florida                                   5,928,629      1,976,210     3,952,419
Georgia                                   3,188,424      1,062,808     2,125,616
Hawaii                                      392,949        130,983       261,966
Iowa                                      1,002,882        334,294       668,588
Idaho                                       437,884        145,961       291,923
Illinois                                  4,187,442      1,395,814     2,791,628
Indiana                                   2,048,726        682,909     1,365,817
Kansas                                      950,722        316,907       633,815
Kentucky                                  1,253,728        417,909       835,819
Louisiana                                 1,267,698        422,566       845,132
Massachusetts                             2,569,031        856,344     1,712,687
Maryland                                  1,674,218        558,073     1,116,145
Maine                                       382,579        127,526       255,053
Michigan                                  2,903,672        967,891     1,935,781
Minnesota                                 1,957,780        652,593     1,305,187
Missouri                                  1,834,214        611,405     1,222,809
Mississippi                                 712,491        237,497       474,994
Montana                                     267,224         89,075       178,149
North Carolina                            3,029,549      1,009,850     2,019,699
North Dakota                                240,498         80,166       160,332
Nebraska                                    605,746        201,915       403,831
New Hampshire                               446,137        148,712       297,425
New Jersey                                2,943,318        981,106     1,962,212
New Mexico                                  525,031        175,010       350,021
Nevada                                    1,065,774        355,258       710,516
New York                                  6,458,984      2,152,995     4,305,989
Ohio                                      3,503,807      1,167,936     2,335,871
Oklahoma                                  1,093,621        364,540       729,081
Oregon                                    1,264,460        421,487       842,973
Pennsylvania                              3,776,990      1,258,997     2,517,993
Puerto Rico                                 438,654        146,218       292,436
Rhode Island                                326,879        108,960       217,919
South Carolina                            1,430,226        476,742       953,484
South Dakota                                253,017         84,339       168,678
Tennessee                                 1,961,269        653,756     1,307,513
Texas                                     8,806,708      2,935,569     5,871,139
Utah                                        978,540        326,180       652,360
Virginia                                  2,674,255        891,418     1,782,837
Virgin Islands                               17,437          5,812        11,625
Vermont                                     183,292         61,097       122,195
Washington                                2,366,077        788,692     1,577,385
Wisconsin                                 1,886,749        628,916     1,257,833
West Virginia                               438,005        146,002       292,003
Wyoming                                     177,037         59,012       118,025
US Total                                 99,750,000     33,250,000    66,500,000

                                      III-1