| Debbie Gardner
GREATER SPRINGFIELD – As the effects of the COVID-19 stay-at-home orders continue to permeate the Massachusetts economy, more small businesses are fighting to stay afloat, and more workers are facing temporary – or permanent – job loss.
With these economic upheavals affecting nearly every family in our readership in some way, Reminder Publishing reached out to a pair of local legal and financial experts for advice on what steps individuals and businesses can take to best weather these times.
Types of unemployment situations
According to figures supplied by the free online credit reporting service WalletHub, although Massachusetts is reporting the third lowest number of unemployment claims in the country at this point, that still translated into 80,345 individuals filing for benefits the week of April 15. According to Atty. Patricia Rapinchuk, and employment law specialist with the Springfield-based firm of Robinson Donovan P. C., those newly unemployed may fall into one of several categories including - but not limited to - voluntary, furloughed or laid off, with different potential outcomes and expectations for each situation.
Temporary voluntary unemployment may have occurred because of COVID-19 related causes, Rapinchuck said. “You may have been advised by your healthcare provider to quarantine [because of exposure], you may be caring for an individual who is quarantined or isolated because of a COVID-19 diagnosis,” or you may have been advised by your physician to stay at home because you are in the high-risk category, Rapinchuck said.
If you have been furloughed, there is a difference between that and a straight layoff, she said, “If you are furloughed there is an expectation that you are going to remain in contact with your employer and vice versa and you are going to be willing to return to work when your employer needs you to.”
A furlough is “A temporary situation, you are still considered an employee – and your employment situation isn’t severed,” she explained. With a layoff, “you are no longer employed. If the business reopens, you have to be rehired.”
Your next step
In all cases, Rapinchuck said an individual’s first move should be to apply for unemployment benefits. ‘I wouldn’t call it good news, but pandemic unemployment assistance is designed to help people who have lost their job for qualified reasons, many of which would not have been [available] in the past,” she said. Among those are the aforementioned COVID-19 related causes, as well as someone who received a job offer but couldn’t start, had the job offer rescinded due to a COVID-19 related situation, or suddenly became a family breadwinner because of a COVID-19 death and has no job.
As of April 20, those individuals eligible to apply for pandemic unemployment assistance also now include contract workers, gig workers, self-employed individuals and individuals who work for religious institutions and churches. Rapinchuck said individuals in these categories would not be eligible for unemployment under normal circumstances.
She said the pandemic unemployment benefit information can be found on Mass.gov by searching for Pandemic Unemployment. The information is “like a booklet you can scroll through; if you have questions it is a good place to go,” she said. The current pandemic unemployment benefit offers 39 weeks of assistance, and may include an additional $600 per week calculated benefit for eligible individuals provided through the federal CARES Act, through July 25. She said furloughed individuals may be eligible to collect unemployment to cover the reduced hours they are not working.
Other financial considerations
Rapinchuck said the status of your unemployment - temporary, furloughed or laid off - will have implications for other employment related benefits such as health insurance, life insurance and any pension or 401K plans.
“If you have health insurance through your employer and you are furloughed,you may be able to remain on the health insurance,” Rapinchuck said. “If you are laid off you are immediately not on [employer] health insurance. You will receive information about applying for COBRA coverage and need to decide whether to go on that route or some other route.” Other benefits would be similarly terminated under a layoff or separation agreement, she said.
More money moves to make
East Longmeadow-based financial advisor Charlie Epstein, owner of Epstein Financial, said those who find themselves temporarily – or permanently – out of work have several options to help balance their now tighter budgets.
“One thing you can do if you have a mortgage, you can defer your next three months of mortgage payments,” Epstein said. “Call up your bank and ask for it. The bank will ask for financial information – a reason for the request – explain this is a virus related reduction in income and [the bank]will move the next three months of mortgage payments and put them on the back end of your mortgage.” That move, he said, “will free up cash flow” for the time being.
Epstein said individuals carrying car loans could ask for the same consideration.
A similar option is available for business owners, he said. “If you are in business and have a business loan, you can go to your business bank and ask for the same thing,” he said. “They will take the principal payments and put them on the back end of the mortgage and you will only pay the interest” at this time. Regarding the monies given out under the initial federal Paycheck Protection Program, he noted those small businesses who received an account ID number from their banks during the first round of loan disbursemen tapplications are guaranteed to receive the funds they applied for.
Epstein said this is also an optimum time for both business owners and individuals to work with their lenders to try and renegotiate a lower interest rate on their loans. He also suggested individuals might also explore taking out a home equity loan to provide a cash reserve if needed.
If an individual has a 401K plan with their employer – and their company’s plan has been amended to allow it – Epstein said they can access up to $100,000 [if available] in that account without the usual 10 percent withdrawal penalty, under the federal CARES act. “If you withdraw that $100,000, it is taxable, but that is spread out over three years, beginning in 2012,” he said.
When it comes to the federal stimulus check, Epstein said he didn’t agree with some other financial advisors that have suggested setting aside a portion for investment. He said in most instances, those checks will “have been spent” on necessities as soon as they are received. If you can, Epstein suggested individuals “Take a little bit of that stimulus money and do something that makes you feel good, because people are worried and they are stressed out.”
“Go buy a nice bottle of wine, at the supermarket buy something extravagant and make a nice meal and toast your health. That is worth way more than taking $500 or $100 for investment,” he said, “If you don’t create a habit of enjoying life [now], you never will.”