Unemployment Benefits for Furloughed Employees in South Carolina

By Reggie Belcher and Hannah Stetson

Reggie Belcher and Hannah Stetson, Turner Padget Graham & Laney PA

The COVID-19 pandemic continues to affect all aspects of society. For many businesses and employers in South Carolina, the pandemic’s effects have necessitated tough decisions regarding retention of employees.  While these decisions may involve the termination of employees, they also encompass alternative actions, including a reduction in employee hours, a furlough or temporary layoff of employees. In response to increased unemployment claims involving these alternative actions, federal and state governments have acted to expand benefits available to businesses and their employees during this unprecedented time.

Federal Unemployment Legislation

Congress recently enacted two laws directly affecting unemployment insurance claims—the Families First Coronavirus Response Act (FFCRA) and the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act).  The FFCRA encourages states to relax unemployment eligibility requirements. The CARES Act provides an extra $600 a week in unemployment benefits for a set time period to eligible persons under the Federal Pandemic Unemployment Compensation (FPUC), extends the eligibility period for unemployment benefits up to an additional 13 weeks under the Pandemic Emergency Unemployment Compensation (PECU) Program and provides benefits under the Pandemic Unemployment Assistance (PUA) Program to certain independent contractors, gig-workers and self-employed workers not typically entitled to unemployment benefits.

Governor McMaster’s Executive Orders

While the FFCRA and the CARES Act are implemented at the state level by the South Carolina Department  of Employment and Workforce (DEW), South Carolina Governor Henry McMaster also issued his own Executive Orders relevant to the receipt of unemployment benefits in South Carolina. For example, on March 19, 2020, Governor McMaster issued Executive Order No. 2020-11, directing DEW to waive the one-week waiting period for individuals otherwise eligible to receive unemployment benefits and expediting the timeline for eligible employees to receive benefits.

More recently, on April 7, 2020, Governor McMaster issued Executive Order No. 2020-22, specifically addressing employer payments to furloughed employees. For the purposes of this Executive Order, a “furlough” refers to “a temporary period of time during which an employee performs no personal services for the employer as a result of a layoff caused by the economic impacts of COVID-19.” Some employers are opting to implement furloughs due to the unknown duration and scope of the pandemic. However, employers recognize the detrimental effects a furlough can have on employees, and many employers want to provide furloughed employees with financial assistance as a show of support or appreciation, or even as an incentive for the employees to return to work when conditions improve.

Typically, this type of financial assistance would be classified as a “wage” under South Carolina law, requiring a reduction in the amount of unemployment benefits an individual can receive.  To remedy this issue, the Executive Order provides that a voluntary payment or series of payments made by an employer to an employee in response to furloughing the employee will be treated by DEW as a form of severance pay that does not reduce the amount of unemployment benefits the employee would otherwise be eligible to receive.  The Order specifically refers to these payments as “COVID-19 Support Payments” and specifies that furloughed employees can accept these Support Payments without concern of a benefit reduction.

Takeaways for Employers and Employees

Employers and businesses are faced with hard choices to adapt to the economic fallout because of the  pandemic; however, termination of employees is not the only option available to employers. Federal laws, along with state incentives like Executive Order 2020-22, provide employers with options for alternative actions, such as furloughs, that can allow employers to provide financial support to its employees while still allowing employees to receive unemployment benefits. Due to the ever-changing nature of the pandemic response on a federal, state, and local level, it is critical for businesses to seek advice and counsel when evaluating the best steps to take moving forward.

Reginald W. Belcher is a shareholder and certified specialist in labor and employment law with the law firm of Turner Padget Graham & Laney PA, and Hannah D. Stetson is an associate with Turner Padget Graham & Laney PA. You can reach them at 803-254-2200 or by email at [email protected] and [email protected].