August 25, 2020

The Lost Wage Assistance Program Provides Relief After the CARES Act $600 Weekly Benefit Expired

On August 8, 2020, President Trump authorized the creation of the Lost Wage Assistance (LWA) program to provide lost wage assistance to unemployed individuals as a result of COVID-19. The LWA is intended to provide additional unemployment assistance after the Coronavirus Aid, Relief and Economic Security (CARES) Act’s $600 per week supplement expired on July 31, 2020. Under the LWA program, eligible claimants may receive $300 or $400 in supplemental benefits.

The Federal Emergency Management Agency (FEMA) will provide grants to participating states, territories and the District of Columbia for lost wage assistance. States may provide eligible claimants $400 per week, with a $300 federal contribution, in addition to an individual’s regular weekly unemployment benefit (UI) amount. The benefit is funded using 75% from the Disaster Relief Fund administered by FEMA and the remaining 25% through state unemployment insurance funding.

If states wish to provide the maximum, $400 benefit to claimants, they may provide an additional $100 per claimants using amounts allocated to them to cover the 25% state match. However, states may count funds that are already used to provide regular UI benefits towards the 25% state funding requirement, in which case eligible claimants will only receive a LWA payment of $300 in addition to their weekly UI benefit amount, and not the additional $100 permitted under the LWA.

Eligibility Standards

An “eligible claimant” is an individual who (1) can self-certify that he or she is unemployed due to disruptions caused by the COVID-19 pandemic; and (2) receives at least $100 in weekly benefits under a preexisting unemployment compensation program. Examples of preexisting unemployment compensation programs:

  • Unemployment Compensation
  • Pandemic Emergency Unemployment Compensation
  • Pandemic Unemployment Assistance
  • Extended Benefits
  • Short-Time Compensation
  • Trade Readjustment Allowance
  • Payments under the Self-Employment Assistant program

The LWA program will cover the benefit weeks commencing on August 1, 2020 through December 27, 2020. However, the program may end earlier if Congress passes legislation aimed at providing supplemental unemployment insurance benefits for those impacted by the COVID-19 pandemic or if the $44 billion of the Disaster Relief Fund earmarked for implementation of the LWA is either expended or the Disaster Relief Fund decreases to $25 billion. FEMA guidance clarified that the benefits will be retroactively issued to the week of August 1, 2020. Given the funding limitations, the LWA funds may be used up well before December 2020.

Since the announcement of the LWA program, Arizona became the first state to start paying LWA benefits to program participants and over a dozen states are in the process of applying for the program. The majority of states have not committed to participate, and South Dakota has affirmatively declined to partake in the program. States have until September 10, 2020 to submit applications to FEMA.

Differences With the CARES Act

The LWA payment differs from the CARES Act supplement in several ways:

  1. Through the LWA, recipients may receive only $300 or $400 per week in supplemental benefits compared to $600 that was provided through the CARES Act.
  2. Recipients must receive at least $100 in unemployment benefits to receive LWA supplement. Under the CARES Act, individuals who received at least $1 of unemployment benefit assistance were eligible for the $600 supplement.
  3. Participating states will need to administer a self-certification process for eligible LWA recipients, which was not required under the CARES Act.

Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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