“Ask Sheila” Column
We are considering a temporary 20 percent reduction in hours and wages for many of our employees, because of current pandemic-related economic conditions. Will these employees be eligible for unemployment?
Yours truly, Tough Times
Dear Tough Times,
Probably not. In order to be eligible for partial unemployment benefits under Texas law, employees must meet the definition of partially unemployed in each work week. If they receive more income than the maximum for partial unemployment, they will not be eligible for benefits. To be considered “partially unemployed” by the Texas Workforce Commission, and thus eligible for partial benefits, you must reduce the wages enough to bring the employee below 125 percent of what the full benefit would be if they were fully unemployed.
For example, an employee whose full-time weekly wages are $800 would receive $420 per week if fully unemployed. 125% of $420 equals $525. So if you reduce the employee’s wages to more than $525 per week, the employee will not be eligible for benefits, because the income is more than the minimum for partial unemployment. If you reduce this employee’s wages by 20 percent, the wage would go from $800 to $640, which will be considered full-time employment by the TWC, and thus no benefits. In fact, you could go to 25 percent reduction and still be within the full-time range for unemployment purposes.
To figure out what weekly benefits an employee would receive if full-time unemployed, the TWC looks to reported wages the employee earned from any source during the four quarters preceding the current one (the “base period”). Go to the TWC’s benefits calculator at https://apps.twc.state.tx.us/UBS/benefitsEstimator.do. Be aware, however, that the maximum benefits may be higher if the employee had a second or higher-paying job during the base period.
Also, if the employee is currently receiving other reported income, that amount will be combined with what you are paying to reach the 125% threshold. The employee commits fraud if they do not report all wages.
The CARES Act temporary federal unemployment benefit of a flat $600 per week will not come into play unless the employee is first eligible for Texas unemployment. If TWC awards even the minimal benefit, then the employee will receive the full $600, at least until the federal benefit is set to expire on July 31, 2020. It is possible that it will be extended by publication time.
“Ask Sheila” is prepared by Sheila Gladstone, Chair of the Firm’s Employment Law Practice Group. If you would like additional information or have questions related to this article or other employment matters, please contact Sheila at 512.322.5863 or firstname.lastname@example.org.