As the global pandemic goes into its third year, there is no question that it has had a major impact on business owners throughout the country. For example, due to restrictions on in-person gatherings, many companies have shifted (completely or partly) to online work environments and to online commerce spaces. Some businesses have even had to close their doors altogether.
Many business owners have been forced to lay off employees because the volume of business they once enjoyed has declined and they can no longer justify having those workers on hand. When business tapers off, as it has for many organizations due to COVID-19, it can become necessary to let some employees go.
At that point, there's not really any action required on the part of the company aside from responding to the claims that will be made to its state for extended benefits. The money that the company is required to pay for unemployment taxes then becomes the source used by the state to provide unemployment benefits to those individuals filing claims.
In the event new layoffs result in an unemployment claim, the state will contact the company to verify the details of employment. When a former employee files for unemployment benefits, their former organization is required to respond to their claim notice but also has the option of contesting it.
Employees who are fired for just cause are typically ineligible for regular unemployment benefits, because the program was set up to assist workers who have been laid off through no fault of their own or who are unable to work due to reasons outside of their control. Anyone who is terminated for violation of company policy, poor performance, or for any kind of misconduct will most likely not qualify for regular benefits. In this scenario, the company will need to provide evidence that the employee violated company policy or provide some proof of misconduct on their part. Once this is done, the state will make a determination on whether the employee should receive benefits.
The CARES Act
Prior to the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020, it was not possible for business owners to collect unemployment themselves if they fell into any of the following categories:
- They were self-employed.
- They were gig workers.
- They were independent contractors.
That changed when the CARES Act went into effect, and business owners in those categories finally became eligible for regular unemployment benefits.
The only individuals ineligible for relief from this stimulus package are those who were still able to work from home or those who have closed their doors for reasons other than the pandemic. Most self-employed individuals who have been put out of business by the pandemic have been able to obtain relief through the CARES Act.
Resources Available to Business Owners
Many businesses and business owners have struggled with the government restrictions (such as social distancing requirements) enacted in response to the COVID-19 pandemic. A number of resources are available to offer them some relief.
Pandemic Unemployment Assistance Program
Under the Pandemic Unemployment Assistance (PUA) program, which went into effect during the latter part of 2020, individuals who were previously ineligible for regular unemployment benefits have been able to qualify for the payments that others had already been awarded. Recipients are entitled to as many as 39 weeks of benefits and can receive PUA payments retroactively, dating back to January 2020. This program is similar to unemployment in that it's administered by individual states; therefore claimants are obliged to submit their PUA applications through their state channels.
In addition to the PUA program, business owners received economic impact payments in 2020 that were intended to help taxpayers survive the hardships imposed by the coronavirus. Single taxpayers received $1,200, couples received $2,400, and couples were paid $500 for each dependent child in their custody.
Families First Coronavirus Response Act
Enacted in early 2020, this measure reimburses business owners that employ fewer than 500 employees. Its intent was to ensure that workers would not have to choose between staying employed and complying with safety protocols during the pandemic. It also reimburses the businesses in which these employees work in order to relieve some of the pressure on them.
Small Business Association Loan Program
Other guidelines were issued by the federal government with regard to programs already in place, such as the Small Business Association (SBA) loan program.
- The COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) was made available to businesses that suffered serious economic damage as a result of a federally declared disaster. (As of January 2022, this program is no longer accepting new applications.)
- The SBA also initiated the Paycheck Protection Program (PPP) to help businesses keep their employees working and avoid laying them off. By forgiving loans, it sought to help employers keep workers on their payroll since it would relieve the pressure of having to make loan payments, thus freeing up capital that could be used for payroll. (This program ended in May 2021.)
- The SBA's Local Assistance Directory provides locations of local offices where assistance may be obtained.
The federal government is aware of the stress that the pandemic has placed on the shoulders of small business owners and has reacted as quickly as possible to provide help in many different forms. It is a worthwhile investment of time and effort for businesses to educate themselves about and make use of the loans and programs described above.