Unemployment and Loan Resources

Unemployment Changes & Updates

All those not working because of COVID-19 are eligible to File for Unemployment. The previous 680-hour requirement is waived as is the waiting week. For the first time, owners, sole proprietors, independent contractors, gig workers, etc. will also qualify; the system will go live on Saturday, April 18. Until then, keep track of when you stopped working and/or when your hours reduced so that you can get retro pay.

Employment Security Department is reporting huge volume which has caused the system to repeatedly crash; they are aware of the issue and working to resolve. Be prepared by reviewing the Unemployment Benefits Application Checklist and please be patient. Their staff is trying their best in an overwhelming situation. Call (800) 318-6022, 8a-4p, Mon-Sat.

All workers receiving Unemployment Benefits will get $600 Pandemic Employment Benefit weekly in addition to their weekly Unemployment Benefits. At this time, there is not an estimated start-date, but the pay will reimburse back to Sunday, March 29.

Update for People Awaiting Unemployment Benefits

The Employment Security Department (ESD) is continuing efforts to ensure “all benefits to all eligible applicants” and has provided additional information for people who have not successfully qualified or received unemployment insurance benefits. See below if this issue is affecting you:

ESD is working night and day to resolve this. Hear more from ESD’s commissioner, Suzi Levine.

The efforts of Operation 100% include some key initiatives, including:

  1. Continue rapid hiring of staff who can help customers with questions and process claims. We have already tripled these staff but will continue to scale up to meet the incredible need.
  2. Activate our technology to bulk clear issues and free up payments. This technique applied to certain issues already has helped tens of thousands of customers, and we have identified a number of other areas where technology will help us resolve issues.
  3. We will increase outbound claims resolution calls and limit inbound phone calls for one week: May 13 to May 20. With 100 calls coming in per second many days, customers are extremely frustrated and staff don’t have time to process claims that have been waiting the longest.

While you wait: Check your spam folder—regularly. Adjudicators may be trying to reach you with questions so they can resolve the issues that are blocking your benefits. Did you apply online through eServices? You’ll get messages from no-reply@esd.wa.gov asking you to sign in. Sign in and respond to those requests within five days—the sooner the better. You may also get follow-up emails from ESD. If so, reply to those emails directly.

Answer your phone if you get a call from 800-318-6022. If you miss a call from ESD, the only way to call back is through the .main line for the claims center—and it won’t be easy to get through. Do everything you can to answer your phone and avoid calling back through the claims center. ESD’s claims centers are overloaded. The department has seen a 1000% increase in calls to its claims center, and last week was getting 100 calls per second.

What is adjudication? It’s required when ESD needs more information to determine your eligibility for benefits. There are a lot of different reasons for this. Often, the department needs more details about why you’re not working. ESD also needs to verify that you meet requirements, such as being able to work if a job is available.

Why does it hold up payment? All benefits are determined on a case-by-case basis. Your specific circumstances affect what you’re eligible for. ESD needs to confirm things like work history, any job separations, and the hours you’ve worked before the department can determine what you’re eligible for. And, if incorrect information was accidentally submitted, ESD has to verify the correct information before it can approve a claim.

Adjudication requires fact-finding and specialized expertise. Adjudicators go through extensive training to develop deep expertise. They’re different than ESD’s intake staff, who are prepared to answer more general questions. If, for example, employers give ESD information that doesn’t match, adjudicators:

  • Do more fact finding to identify the correct information.
  • Apply state and federal laws.
  • Determine if workers are eligible and the kind of benefits they can get.

Under normal circumstances, it takes around 21 days to adjudicate issues on a claim: These aren’t normal circumstances. ESD has had more applications in the last seven weeks than the previous three and a half years combined. And with so many businesses closed, it’s harder to reach employers if ESD needs to verify information with them.

It’s about due process for everyone: ESD does not want to deny your benefits because of a discrepancy and needs to ensure claims filed under your name are really you. It is important to protect you, and all taxpayers, from fraud. Unfortunately, this does take time. ESD is sorry you have to wait and is working hard to resolve all cases in adjudication as quickly as it can.

Stay tuned for more: ESD will be posting updates on its progress to resolve adjudication cases on its website at esd.wa.gov/unemployment/adjudication starting next week.

SharedWork to Reduce Hours

To encourage businesses from laying off employees, Employment Security Department encourages employers to use the SharedWork program. If you are reducing the hours of your employees, Unemployment will pay for a portion of the reduced hours. Employees on the SharedWork program will also receive the additional $600 of Pandemic Unemployment Benefit weekly.

i.e. All staff is reduced to 30 hours per week. The business pays for the 30 hours actually worked, Shared Work compensates them the equivalent of 10 hours of pay, so that the employees receive 40 hours pay for the week.

Paycheck Protection Program (PPP)

In effort to keep employees on payroll, the Paycheck Protection Program is available for small businesses; generally up to 500 employees, but up to 1,500 employees (depending). Businesses in the Accommodation and Food Services Sector are eligible up to 500 employees per location. 501 (c)(3) nonprofits, sole proprietors, the self-employed, and independent contractors are also eligible.

This loan requires no personal guarantee or collateral. The lender defers fees, principal, and interest for 6-12 months. Generally, business qualify for 2.5 months of payroll costs. The loan will be forgiven if it is used for payroll costs, interest payments on mortgages, rent payments, and utility payments between February 15 and June 30, 2020. Go to sba.gov to see local assistance.

Paycheck Protection Program (PPP) Loan Forgiveness
Loan forgiveness will be reduced if the borrower reduces employment by more than 25%.

SBA Loan Forgiveness application and accompanying training webinar recording that shows a walkthrough of filling out the application.  

Guide to PPP Loan Forgiveness, by US Chamber of Commerce

Additional guidance on PPP loan forgiveness was released on May 22 and covers several important and previously undiscussed topics relevant to most PPP borrowers, including timing of eligible payroll and non-payroll expenses, eligible forms of pay to employees and owners, and how to calculate the earnings of sole proprietors and general partners. Below is a guide to key provisions (provided by Heritage Bank).

Section 3a – Timing of Forgivable Payroll and the Alternative Method
Eligible payroll means it was paid or incurred during the eight-week forgiveness period. Paid means on the day paychecks are distributed or direct deposited. For convenience, borrowers have two options about how to apply the eight-week period. You can start the period:

  • On the day your PPP loan was funded; or
  • The first day of the first payroll cycle after the loan disbursement, if your payroll is issued on a bi-weekly basis or more frequently. This is the “alternative payroll period,” which may be more convenient to use than the loan funding date. (See examples in the IFR that explains how to use the alternative payroll period.)

Section 3b – Pay to Furloughed Employees, Bonuses and Hazard Pay Are Eligible
Three new categories of pay are now specifically eligible for forgiveness with this IFR. In addition to wages, salaries, vacation and paid sick time that was previously allowed, employers may now also include:

  • Bonuses
  • Hazard pay
  • Salary, wages or commissions paid to furloughed employees

Important: There remain limits on the total amount of such payments. All forms of cash compensation combined cannot exceed $15,385 per employee during the eight-week covered period, which is $100,000 on an annual basis.

Section 3c – Caps on Eligible Pay of Sole Proprietors, Owner/Employee and General Partners
The forgiveness calculation for a business owner’s own compensation is an important supplement to the PPP Forgiveness Application and, if applicable to your business, we recommend that you carefully review this section.

In summary, the portion of loan forgiveness related to a business owner’s compensation calculation is capped is at 2019 annual compensation divided by 52 weeks, then multiplied by eight weeks. The source documents for this compensation calculation are the same ones used for your PPP loan: 2019 Schedule C or F for a sole proprietor and 2019 Form 1065 and K-1s for general partners’ income in a partnership.

New guidance for owner-employees was introduced in this section, including the treatment non-cash payroll benefits for owners such as health insurance and pension contributions. Please carefully review if you are an owner receiving wages and benefits from your company.

Section 4 – Timing Of Non-Payroll Expenses. No Principal or Advance Payments of Interest
Certain non-payroll facilities costs (rent, utilities, mortgage interest, etc.) are also eligible for PPP loan forgiveness. A non-payroll cost is eligible for forgiveness if:

  • It was paid during the eight-week covered period; or
  • It was incurred during the covered period and paid on or before the next regular billing date. This is true even if the billing date is past the eight-week period.

See examples in the interim final rule that explains how to use the non-payroll period. Also, please remember that non-payroll expenses may not make up more than 25% of the total forgiven amount.

Also, the IFR made clear that advance payments of interest on mortgage obligations for real or personal property are not eligible for forgiveness. This complements prior restrictions on the use of PPP funds to make principal payments on mortgages.

Finally, the IFR contained additional guidance in Section 5 about how to calculate and apply the two required forgiveness modifiers: for reductions in FTE and reductions in employee pay beyond 25%, that may be combined to materially reduce the forgiven portion of your PPP loan. Heritage Bank will address modifiers in a separate email and may provide future updates as important additional official guidance becomes available. We will also update you when instructions on how to apply to Heritage Bank are ready to share.

This update is being provided to you as a convenience. This information does not, and is not intended to, constitute legal advice; instead, all information, content and materials are for general informational purposes only. You should contact your attorney to obtain advice with respect to any particular legal matter.

SBA Economic Disaster Injury Loans (EIDLS)

Economic Disaster Injury Loans are a Small Business Administration program that has been around for years being used for disasters such as hurricanes, earthquakes, etc. Borrowers can receive up to a $10,000 cash advance deposited into your account in 3 business days following approval (an estimated 14-21 days) that is forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments, or repaying obligations that cannot be met due to revenue losses.

These loans can be made based solely on credit scores and are available to all businesses and nonprofits. Loans less than $200,000 can be approved without a personal guarantee. No collateral is required for loans of $25,000 or less. General security interest in business assets will be used for collateral instead of real estate for loans of more than $25,000.

You may receive up to $10,000 without having to accept an EIDL loan. However, if you also secure a PPP loan, the advance will be subtracted from the amount forgiven.

The SBA announced on May 4, 2020 that agricultural businesses are now eligible for EIDL programs and must submit a streamlined application. Also, any business that submitted a COVID-19 EIDL application prior to March 30 and has a “2” as the lead number in their application confirmation number must also reapply using the new streamlined application for their application to be processed.

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