The owner of a small business here in Georgia is trying to collect unemployment funds from his employees. When his employees were furloughed related to COVID-19, they received unemployment benefits, including the extra $600 per week that was part of the CARES Act. So, at least some of them received more in unemployment than their regular salary. Now that they have returned to work, he has told them anything they received above their regular pay rate is considered a payroll advance and will be deducted from their paychecks. For one employee, that would have meant no paycheck for 2 months.
Yikes.
There’s a lot going on here, so let’s start with a few basics about unemployment benefits. While companies pay into unemployment, the Department of Labor (DOL) is in charge of providing the benefits. When current or former employees are interested in receiving unemployment, they file with the DOL. The DOL will request some information from both the employee and the employer, decide whether the employee is eligible, and provide the funds to eligible employees. Companies don’t directly pay the employees, or vice versa. Everything goes through the DOL.
Related to the CARES Act, states were able to provide an extra $600 per week in unemployment benefits for a length of time due to the COVID-19 pandemic. Again, since this is part of unemployment, the DOL makes these decisions – not the employer.
It’s inappropriate for any employer to ask any employee to pay them any amount of unemployment benefits. On top of this, the small business owner is communicating the extra funds are a payroll advance and will be deducted from future checks. This is a major issue as it means that employees won’t be getting paid for hours worked, violating the Fair Labor Standards Act (FLSA).
What the small business owner is doing is wrong. But it’s not just because he can’t do this – it’s because he shouldn’t. Even without the laws and rules in place, the concept is wrong. Taking money that was provided to help individuals make ends meet while not being able to go to work due to a global pandemic is wrong. The owner made the decision to furlough his employees. Now, his current actions come across like he’s trying to somehow benefit from their misfortune or punish them for receiving assistance. Either one is a sign is disrespect and mistreatment of his employees.
Here are some takeaways:
As an employer, you may sometimes have concerns about unemployment benefits. If you have concerns about eligibility, the amount of money an individual is receiving, or fraud or abuse occurring, contact the DOL for them to look into it and make a determination. Avoid taking matters into your own hands – just provide information to the DOL and work with them for a resolution.
When it comes to unemployment eligibility, let the DOL make the determination. Avoid telling an employee that he or she won’t be eligible or discouraging employees from applying. Even if you think an employee shouldn’t be eligible (like when terminating for cause), just give them the DOL paperwork and let them decide whether to apply. If they do, you’ll have the opportunity to provide your own information to the DOL to show why they shouldn’t be eligible.
Should you find yourself in the unfortunate situation of having a boss try to tell you to pay the company any of your unemployment funds, say no! Remind your boss that this money came from the DOL and any concerns must go through them. Make it clear that you don’t authorize a deduction from your paycheck and you expect to be paid for hours worked. If the money is still deducted, I’d contact the DOL and possibly an attorney. Whatever you do, don’t quit. The worst that can happen is you get fired. If that happens, I’d contact an attorney. Then, go file for unemployment.
Photo credit: By Kritchanut / Canva
