As businesses start to reopen after being closed to stop the spread of COVID-19, employers are calling their workers to return to work.  Questions are being raised about the impact on unemployment benefits if people decide not to go back to work when their employers ask them.  The answer depends on which state is making the decision.  

Before the coronavirus, nearly everyone who was unemployed made more money in their job than staying home.  The Pandemic Unemployment Assistance (PUA), which was created under the Coronavirus Aid, Relief, and Economic Securities (CARES) Act, has helped those who find themselves on unemployment through no fault of their own.  But the legislation provided $600 weekly above all state unemployment compensation, and some states are providing additional compensation above their standard amounts.  According to a May 13, 2020, American Action Forum report, “63 percent of workers currently make more on unemployment with the federal supplement than they would working, but even if the federal supplement is reduced to $100 a week, 25 percent of the U.S. workforce could still make more on unemployment than returning to work."

This means tens of millions of Americans will continue to receive more money staying home than going back to work as long as the higher benefits are available. Currently, they expire on July 31, 2020. The House of Representatives passed the  the Health and Economic Omnibus Emergency Solutions (HEROES) Act on May 15, which extended the additional benefits to January 31, 2021.

According to Allison Schrager of the Manhattan Institute, the current 14.7 percent unemployment rate is almost as “deep and severe as the Great Depression itself.”  Schrager noted that economic recovery depends on how fast U.S. businesses can reopen and what the government can do to encourage improved employment opportunities.  Many of those who are currently unemployed are either furloughed, contract employees, or laid-off workers who will be rehired once their employer is able to reopen.

Ryan Guina of Forbes provided five reasons someone should return to work even if one makes more on unemployment insurance compensation:  ineligibility for unemployment compensation if offered a job back; the expanded compensation is limited in duration; refusing a job offer today may mean one may not have a job after the crisis is over; an employee could lose employer-sponsored benefits; and working provides an employee with control and a sense of accomplishment over their life. 

States are responding in different ways about what should happen to unemployment compensation if an individual decides not to return to work.

Alabama, provides maximum unemployment compensation of up to $875 a week.  The state’s Labor Secretary Fitzgerald Washington said that the unemployment compensation is for those who are unable to find work, and the employer can alert the state Department of Labor if a person refuses to return to work.  If someone defrauds the program, that person will have to repay any money received. 

Without a valid excuse in Iowa, workers who decide not to return to work would lose unemployment benefits, and it would be considered a “voluntary quit.” There are exceptions to this determination, including individuals and members of households who have COVID-19, have no access to childcare, or lack transportation.  

While some states have adopted policies similar to Alabama and Iowa, others will still allow people to stay on unemployment compensation even if they are offered a job.

Californians who refuse to return to work could expect to continue receiving unemployment compensation.  According to the Employment Development Department (EDD), an individual “can be eligible for benefits if you choose to stay home.”  California’s maximum unemployment compensation is $1,050 a week, or $54,600 annually, which is 83 percent of the state’s average salary of $65,539.  In Hawaii, a potential employer has the right to challenge and appeal the individual’s decision, which would require that person to pay back the unemployment compensation if the employer’s complaint is found to be valid. 

As employers are slowing opening their businesses again, every employee should return to work and get off of unemployment assistance whenever that opportunity arises.  While the pandemic is unprecedented, unemployment insurance compensation is still meant to be temporary, not permanent.  The CARES Act sunset date for the additional funding should not be extended indefinitely or unreasonably.  Otherwise, the recovery will be unnecessarily prolonged, and jobs that might have gone to employees who are on unemployment will go to someone else, perhaps permanently.