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Frequently Asked Questions – Layoffs and Unemployment Compensation in Maine


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Frequently Asked Questions – Layoffs and Unemployment Compensation in Maine

By: Glenn Israel, Tara Walker, and Bill Wahrer

COVID-19 is affecting all aspects of society and its ramifications are growing each day. Unfortunately, this crisis has also required many businesses to contemplate whether they need to reduce employees’ hours, furlough, or even lay off employees.

Employers are balancing satisfying their business obligations and maintaining viability while also looking out for their employees’ best interests and retaining their workforce. These considerations naturally spur several questions relating to unemployment compensation and employer’s obligations with respect to an employee filing for unemployment consideration. Below is some timely guidance for you to keep in mind.

Changes to Maine Unemployment Insurance – What You Need To Know

On March 18, 2020, Governor Mills signed multiple emergency bills into law in response to the COVID-19 outbreak. One of the measures pertains to temporarily expanding eligibility for unemployment benefits for workers impacted by COVID-19. There are three primary points to keep in mind.

First, the one-week waiting period has been eliminated for unemployment benefits for an individual who is dislocated or temporarily laid off as a result of the state of emergency.

Second, the Legislature has clarified that an individual is eligible for unemployment compensation (as related to COVID-19) if:

  • He or she is under a temporary medical quarantine or isolation restriction to ensure that the individual has not been affected by COVID-19 and is expected to return to work; or
  • He or she is temporarily laid off due to a partial or full closure of the individual’s place of employment as a result of the state of emergency and is expected to return to work once the emergency closure is lifted.
  • He or she is on a temporary leave of absence continues to remain able and available to work for and maintains contact with the relevant employer due to:
    • medical quarantine or isolation restriction,
    • a demonstrated risk of exposure or infection, or
    • a need to care for a dependent family member as a result of COVID-19

Finally, benefits paid to individuals under this law are not charged against the experience rating record of any employer.

Q. If I reduce my employees’ hours or if I furlough my employees, can they collect unemployment compensation? 

Yes, if they’re not working, they are eligible for benefits. If they are working reduced hours, whether they’re eligible for benefits will depend on how much they’re getting paid. An individual can seek unemployment compensation if they are “partially unemployed.”

To be “partially unemployed” means one is working less than 35 hours and does not earn $5 or more above his or her weekly benefit amount (WBA). For most people paid above minimum wage, the weekly benefit amount will be the maximum benefit $445, so if the employee earns $450 or more per week, they do not qualify for benefits in that week. If an employee’s wages varies from week to week, they could apply for and receive benefits for the weeks in which they do qualify.

Q. How are the unemployment benefit amounts calculated?

A Weekly Benefit Amount “WBA” is generally calculated by dividing the average of an employee’s wages in the two highest quarters of his or her base period (first four of the last five completed calendar quarters prior to the date that claim being filed) divided by 22. However, as of June 1, 2019, the maximum WBA for individuals in Maine is $445.00 (plus $10 per dependent per week, capped at no more than one half of the WBA).

Q. What is the “Workshare” Program?

Employers can also consider the “Workshare” option if they considering reducing hours for a number of employees. Workshare allows businesses to retain their workforce during a temporary slowdown in work by reducing employee hours in lieu of layoffs. An employer must satisfy certain metrics in order to be potentially eligible, such as employees hours have to be reduced by at least 10% but not more that 50%. Significantly, this option requires the employer to submit a signed work-sharing plan for approval and has various other administrative requirements. Employers should consult an attorney before considering this option because there are restrictions on the scope and nature of the reductions and the application process can be onerous.

Q. Can employees use paid time off or can I voluntarily pay employees the difference between an employee’s unemployment benefits and their regular rate of pay?

Generally, no. The employee’s nonwage income will reduce the amount he or she receives as unemployment compensation and if it exceeds $450, then the employee becomes ineligible. In general nonwage payments (such as PTO) will reduce an employee’s unemployment benefits, even if the employee remains eligible for unemployment.

Q. What is the difference between a “furlough” and a “layoff,” and which one should I do?

A furlough is a temporary suspension of employment for a specified period of time during which employees do not receive wages, whereas a layoff is a permanent termination of an employee and may be part of a Reduction in Force (RIF) or downsizing, where an employer permanently terminates several employees as part of a planned program. If you project that you will need an employee in the near future, then a furlough is the better course. RIFs also require certain disclosures, which you should discuss with your attorney.

Q. If I furlough or lay off my employees, do I have to pay them accrued unused vacation time?

It depends on your policy.  Under Maine law, an employee must be paid for accrued unused vacation time upon termination unless it is specifically excluded in the employer’s policy.

Q. Do I have to treat all employees uniformly regarding reducing hours, furlough, and layoffs?

Yes and no. An employer may choose to reduce hours for some employees and furlough or lay off others. But employers must carefully consider its criteria for selecting which measures apply to each employee as to reduce any potential disparate impact and minimize the risk of retaliation claims. Specifically, if you are concerned about the vulnerability of older workers or workers with disabilities to the virus, you should not be implementing changes only to those groups.

Q. If I cover the premiums for health insurance for employees on furlough/temporary layoff, will that make them ineligible for unemployment compensation? Is the answer the same if it is through COBRA because my policy will not cover anyone who is not actively employed?

The Maine Department of Labor has instructed employers that continuing to provide health insurance – whether it be through traditional health insurance or COBRA benefits – will not impact your employee’s ability to receive unemployment benefits. Nonwage payments, however, may reduce employees’ benefits, so discuss with an attorney before reimbursing an employee for COBRA payments.

Bottom Line

The COVID-19 crisis is rapidly evolving and so too are changes to employment and workforce issues in Maine. Our team is monitoring these developments in real time and we’re here to support and assist you as needed. Please do not hesitate to reach out if we can be helpful to you.

To learn more visit our Coronavirus Legal Response Team webpage.