Unemployment Benefits Respect State Borders

Under Section 2104 of the CARES Act, nearly all individuals receiving unemployment benefits could temporarily receive an emergency increase of $600.00 in their weekly benefit. This increased benefit is fully funded by the federal government until July 31, 2020. The federal payments were contingent on the execution of a signed agreement between the US Department of Labor (“DOL”) and the respective states. As of March 28, 2020, all states had executed agreements in place with the DOL. Illinois and New York were the first two states to start providing the extra $600.00. 

Although the states entered into an agreement about unemployment with the DOL, that doesn’t mean that the implementation of unemployment benefits is the same nationwide. Unemployment is controlled by each individual state. That means each state implements their benefits in different ways.   

To help show the difference, let’s compare Wisconsin and Illinois with a question many are asking right now.  What unemployment benefits can my employees get if I pay them for really reduced hours?  They were working 40 hours a week, but I only have 10 hours per week for them now?   

In order to be eligible, an employee must either be entirely out of work or be working less than full-time because full-time work is not available.  There are other requirements as well, but I am focusing on hours.  An individual temporarily laid off in this situation could qualify for benefits as long as they were able, available for, and actively seeking work.  That also can mean those whose hours are drastically reduced.   

The Illinois Department of Employment Security stated that the requirement to actively search for work in this situation is waived, so when business returns to normal, a company’s workforce is ready.   

Under the emergency rules Illinois adopted, the individual would not have to register with IDES regarding their active job search in order to be considered to be actively seeking work, as long as the individual was prepared to return to his or her job as soon the employer reopened.

Partial Benefits–Part-Time Work  

In both Wisconsin and Illinois, employees may claim some benefits for a week if they work less than full-time because of lack of work.  In Illinois, their earnings for the week must be less than the weekly benefit amount that they would receive if they were totally unemployed for the week. In Wisconsin, it is possible to receive a partial unemployment benefit payment for a week even when a person’s gross income for that week is greater than their weekly benefit rate (WBR). However, the person will not receive benefits if they work a total of 32 or more hours for all employers in a week they are claiming or if their total gross pay is more than $500.00. 

Regardless, in both states, a person must report all of their earnings from part-time work.  However, Wisconsin and Illinois differ on the impact of that part time work. 

In Illinois, partial benefits equal the difference between the part of the earnings that exceed 50% of the weekly benefit amount and the weekly benefit amount for total unemployment. If the partial benefit amount does not come to an even dollar, it is raised to the next higher dollar, provided it does not exceed the weekly benefit amount.  

For example: 
If the employee’s weekly benefit amount (not including dependency allowance) is $110.00,
50% of that amount is $55.00. 
If the part time earnings for that week are $76.50,
$76.50-$55.00=$21.50.
The amount that exceeds 50% of the weekly benefit amount is $21.50. 

That means $110.00 – $21.50,
Giving the employee a partial benefit amount of $88.50,
Raised to the next highest dollar $89.00. 

In Wisconsin, however, they use a different calculation.  Instead, they look at how much the employee earned, subtract $30 and reduce that again by 67%, then use that to reduce the benefit allowed.   

For example: 
If the employee’s weekly benefit amount (not including dependency allowance) is $110.00, and the part time earnings for that week are $76.50,
$76.50-$30.00=$46.50, 
67% of that amount is $31.16. 

That means $110.00-31.16,
Giving the employee a partial benefit amount of $78.84,
Lowered to the next dollar amount $78.00. 

Remember, the payments received both as unemployment and as wages are considered income for federal and state tax purposes.   

So the question becomes is it better for an employee to have full unemployment or a few hours here and there?  That depends what other costs that you may have relating to keeping them employed, what the base rate is, and what you may be paying them.  From my playing around with the calculators, it seems like they will have more money coming to them if they have any partial hours. But that extra money may not be seen by them if they have to pay for someone to care for their children. And your other costs may increase beyond just the amounts paid.  The good news is that you at least get to run the calculations, and it may work out in everyone’s favor. 

Leave a Comment

DISCLAIMER: The information provided is for general informational purposes only. Posts and other information may not be updated to account for changes in the law and should not be considered tax or legal advice. None of the articles or posts on this website are intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.