Since March 15, 822,300 unemployment claims have been filed in Virginia as a result of the impacts of COVID-19 and other economic factors. As the nation struggles to recover from unemployment rates not seen since the Great Depression, the Virginia Employment Commission (VEC) provided VACo with additional information and resources that counties are encouraged to share with their citizens.
VEC is responsible for the administration of the Commonwealth’s unemployment compensation program, among other duties such as the collection and publication of extensive labor market information data that is used by policy makers and business to promote economic development and growth. The commission adjudicates claims for unemployment compensation and collects the payroll tax imposed on employers for purposes of such compensation. This includes county governments.
- In addition to the normal Virginia Unemployment Insurance (UI) providing 12 to 26 weeks of weekly benefits ranging from $60 to $378 determined by wages earned, supplemental unemployment compensation and assistance has been provided through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Specifically, three new programs are meant to aid unemployed workers struggling during the pandemic:
- Pandemic Unemployment Assistance (PUA) – provides a UI type benefit payment for individuals who are not eligible for traditional UI where the individual cannot work for a COVID-19 related reason, but excludes individuals who can telework or are receiving paid sick leave or receiving regular UI benefits. This benefit is meant to cover individuals who normally wouldn’t be eligible for UI and who may be self-employed, business owners, or independent contractors. This program lasts 39 weeks is available through December 26, 2020.
- Pandemic Emergency Unemployment Compensation (PEUC) – extends the length of UI by up to 13 weeks and applications and payments will begin in early July. The extension is available through December 26, 2020.
- Federal Pandemic Unemployment Compensation (FPUC) – Adds $600 to all UI, PUA, and PEUC benefit payments for which an individual qualifies and ends July 25, 2020.
On June 17, VEC staff provided VACo with a presentation on the state of unemployment in Virginia. According to VEC, of the 822,300 claims filed since March 15, approximately 75 percent of these claims have been approved and received payment, with more than $3.8 billion distributed to individuals who have lost wages during the COVID-19 pandemic. By comparison, during the Great Recession of 2007-2009, the payment rate was 42 percent. 91 percent of monetarily eligible claims resulted in payment within 14 days. However, as of June 6, 80,000 claims are still pending administrative hearings.
Regarding the 25 percent of claimants who made claims and have had issues receiving payment, monetary eligibility and separation qualification requirements may be the cause. This includes claimants who did not earn $3,000 in the two quarters of their base period, claimants who voluntarily quit, and claimants who were terminated for misconduct. Additional reasons for issues with claims include claimants not filing weekly certifications or reporting certain conditions.
Additional information provided by VEC on the Unemployment Insurance tax should be of concern to counties as employers. Three components make up Virginia’s unemployment insurance tax:
- The first is the base tax rate which is experience rated and unique to each employer depending on their individual loss history.
- The second is the pool charge, which is the socialization across all covered employers of all benefit charges that cannot be charged to individual employers.
- The final component is the fund builder, which is imposed on all covered employers when the trust fund balance factor defined in Code Section 60.2-533 falls to or below 50%. The fund builder assessment is an additional 2%. Employers also pay federal unemployment tax of $420 per employee.
Due to the surge in demand for UI benefits, expenditures from the VEC Trust Fund are currently projected to exceed fund balances by the Third Quarter of 2020:
This has the potential to have a fiscal impact to all employers, including local governments by requiring significant increases in Unemployment Insurance Taxes required to maintain the solvency of the VEC Trust Fund. For context, the average tax rate paid by Virginia employers in 2020 is 0.87% which equates to $69.92 per employee. This figure could rise substantially:
Additional information can be found in a presentation that VEC Commissioner Ellen Marie Hess gave to the House Appropriations committee on June 15.
Navigating the COVID-19 crisis requires attention to numerous interrelated issues on many different fronts. Unemployment and the impacts it has on workers and communities is one such area. The following documents may also be of use in helping constituents navigate the unemployment insurance process:
VACo staff will continue to provide updates and learning opportunities on this issue.
VACo Contact: Jeremy R. Bennett