Will My Employees Earn More on Unemployment If They Quit?

Rebecca Mazin
Wed, 10 Mar 2021 13:50:51 +0000

For some people, working outside the home during the pandemic has brought up many concerns about personal safety; others have decided they would prefer to stay home and collect unemployment. As a business owner, you may be wondering if your employees will earn more on unemployment if they quit.

What's the FPUC and why does it matter?

FPUC is the abbreviation for the Federal Pandemic Unemployment Compensation program. The initial benefit that began in March 2020 added $600 a week for eligible recipients on top of what they would earn in state unemployment benefits.

In states where benefits are high, like my home state of New York where employees entitled to the maximum payments were granted $1,108 a week, this resulted in a disincentive to return to work. But when entire job categories were decimated, the extra income was the only way many individuals and families could stay afloat.

The $600 was decreased in subsequent stimulus legislation, and the current amount proposed to begin on March 14 and run through the beginning of September is $300 a week.

Can my employees get unemployment money?

The best answer is maybe. Employers don't make decisions about unemployment insurance (UI) benefits—state unemployment divisions do. When an employee files a claim for unemployment, the employer is contacted by the state agency. One of the first questions an employer is asked is "Is there work available for this employee?" If there is work, the employer should answer yes.

The state unemployment office will then make a determination about benefits eligibility. If an employee's reason for not working is that they prefer to stay home and earn UI payments, they will probably not qualify for the benefit.

More articles from AllBusiness.com:

Can You Start a Business When You’re Collecting Unemployment Benefits?

How to Manage a Gap in Your Income During the Coronavirus Crisis

9 Answers to Your Most Pressing Unemployment Questions

Dealing With Unemployment: 10 Steps to Take After Getting Laid Off From Your Job

What should I tell my employees?

If an employee asks, "Will I get unemployment?", the answer in this situation should be no different than many others. Simply tell them, "We don't make decisions on whether or not an individual gets benefits. The state unemployment office does." Also say, "We will be asked whether work is available for you, and we will answer with the facts: work is available."

You could also remind the employee of any other benefits they would lose if they left the company; also tell them that unemployment is not forever.

I had not heard this sentiment in quite a while, but with the new Covid-19 relief bill on the horizon, I was asked the question twice today. In both situations, if the employees choose to be laid off, they would also go to the bottom of the recall list for their departments. It all looks pretty shortsighted to me.

If you are a smaller employer and don't have other team members on a layoff list, you may also tell the employee they have an option to resign, but they will not be eligible for recall. It's okay to say this as long as you apply the response consistently. For example, don't tell a young mother, "You can stay home and collect that unemployment. You've got those kids to take care of" after you've already told a male employee he is required to return.