Understanding the Bottom-Line for Unemployment Benefits Under the Stimulus Package

In the late evening hours of Wednesday, March 25^th, the Senate unanimously passed the Stimulus Package.  It is anticipated that the House will vote on the Package on Friday, March 27th.  While the Stimulus Package provides broad and diverse measures to lift the economy, among the most vital are the benefits which will directly aid workers who have lost their jobs due to the Covid health crisis.  The package not only expands who may be entitled to unemployment benefits (extending benefits to self-employed workers, part-time workers and gig workers), but also greatly expands the magnitude of benefits available to individuals.  The package increases unemployment benefits by a flat $600 a week for four months.  To understand the magnitude of the $600 boost, consider that the National average weekly benefit as of the end of February was about $372.

Prior to the late-night passage, a group of GOP Senators raised concerns that the proposed $600 per week supplement will create the extraordinary situation where some unemployed workers will actually earn more in unemployment benefits then they had earned working.  This fact is so extraordinary that the GOP group believed it to be a “drafting error.”  To correct the perceived error, the GOP group proposed an amendment to cap any individual’s benefit payments at their level of earnings at the time they were employed, but their proposed amendment was defeated.  Accordingly, under the package some qualifying workers will collect more in unemployment benefits than they had earned while working.

To understand this extraordinary circumstance, it is necessary to look at the goal of the package, which is to make the average qualifying American worker who is laid off during the health crisis through no fault of their own whole.  Finding that the average American worker earns $1,000 per week and, depending upon their State may collect on average 40% of their wages, the package adds a flat $600 per week to the payable benefits to make that average worker whole. Those earning above-average wages may not be made whole, but will benefit from the additional $600 per week in benefits.  Those earning below-average wages collect more in unemployment benefits than they earned while working.  It is important to remember, however, that anyone who voluntarily leaves their job will not receive unemployment benefits.

So, what does this mean for New Jersey workers who find themselves unemployed?  New Jersey already has one of the most generous maximum weekly benefits in the country –  $713. (By way of comparison, the maximum weekly benefit in New York is $504 and in California it is $450).  If a New Jersey worker earning $1,300 per week is laid off during the crisis and qualifies for benefits, he or she will receive the $600 weekly stimulus benefit on top of the New Jersey maximum weekly benefit of $713 for a bottom-line weekly payment of $1,313.  While these extraordinary benefits will end after four months, they should allow many families to fare much better through these uncertain times.

Earp Cohn will remain at the forefront of all developments and will continue to provide real-time updates. In the meantime, companies and individuals needing guidance should reach out to our attorneys for assistance.