Impact on Unemployment Benefits

Employer guidance regarding COVID-19 impact on unemployment benefits in Iowa.

As an attorney practicing in Employment Law, I work with clients on a wide range of employer-employee topics, best practices and training.

The recent emergence of COVID-19 has presented a host of unprecedented issues, topics and overall questions that employers need guidance in navigating. Below are some of the common questions I have received.

Note that this is not intended as legal advice and you should contact your attorney or let me know if you have specific questions for which you need legal advice.

Q: Can I choose to take unpaid leave and just start collecting unemployment right away?
A: It seems Iowa Workforce Development (“IWD”) can’t make up its mind on this question. Initially, IWD drew a hard line, saying that in most cases of a temporary layoff, if an employer offers vacation or other PTO under its policies, it must be exhausted before the employee can collect unemployment. On March 30, 2020, however, IWD announced it was reversing this position. As of April 1, 2020, however, that announcement is no longer featured on its website as it was before. One of the Q/As on their website (which continue to be updated, as well) does confirm that “Employees can use their [paid] leave if they wish to be paid a full wage, but this is no longer a requirement” by IWD.

Q: Are employers required to lay-off employees in order for the employees to be eligible for unemployment benefits?
A: Under normal circumstances, only employees who have a reduction in hours or who are involuntarily laid off by their employer through no fault of their own would be eligible for unemployment benefits. In the case of employees who are filing unemployment claims as a result of COVID-19, however, Iowa Workforce Development is temporarily allowing a broader eligibility standard than normal. For example, employees who are unable to work for the following COVID-19-related reasons will be presumed eligible for unemployment benefits—such as employees who are out of work due to:

  • Caring for a family member;
  • Loss of childcare or school closures;
  • Employer shut down;
  • Need for the employee to self-quarantine;
  • Employee contracts COVID-19 and is unable to work.

Q: If an employee normally only works on a part-time basis, is the employee eligible for unemployment benefits?
A: Potentially, provided that the employee satisfies the eligibility requirements for unemployment benefits. The relevant inquiry for determining eligibility is not “full-” or “part-time” classification, nor based on hours worked—but rather on the employee’s weekly earnings and eligibility.

Q: What is the amount of unemployment benefits an employee will receive?
A: The amount of unemployment benefits an employee will receive is based on the employee’s wages and the number of dependents the employee claims. Weekly benefits can range from $87 to $591.

Q: How long does an employee remain eligible for unemployment benefits?
A: An employee who remains eligible may collect unemployment benefits up to 26 weeks.

Q: Are business owners eligible for unemployment benefits under the program?
A: Under normal circumstances, business owners are not to be permitted to claim unemployment benefits because a closure of the business is treated as a voluntary closure. Given that the COVID-19 pandemic is outside of the control of employers, Iowa Workforce Development has indicated it intends to provide flexibility for such business owners to claim unemployment benefits.

Q: Do employees need to seek alternative work during the period of unemployment?
A: Under normal circumstances, employees receiving unemployment benefits must actively seek work with other employers. For employees who are unemployed for COVID-19 related reasons and have properly indicated this on their claim forms, however, Iowa Workforce Development has indicated it will waive the requirement to search for a new job at this time.

Q: How will an increase in employee claims affect my business?
A: Claims filed and identified as a direct or indirect result of COVID-19 will not be charged to employers. Employers will continue to be notified of claims, but fact-finding interviews will not be held. Employers should carefully complete the information on the Notice of Claim to properly report any paid leave benefits the employee will be receiving.

Q: If a company chooses to lay off employees, does the company need to lay off all employees or can the company lay off only a portion of its workforce?
A: The choice of which employees to lay off is within the discretion of the employer. An employer can choose to lay off either some or all of its employees, but should be cautious to avoid making employment decisions based on protected classes (age, gender, perceived disability, etc.). For example, a company should not mandate only older employees be laid off simply because they may fall within an at-risk group for COVID-19.

Q: How do employees file for unemployment benefits?
A: To expedite their claims, employees should file as soon as they are laid off. To do that, they can go online to and click on “Apply for Unemployment.”

Q: How will the new federal legislation impact
unemployment benefits?

A: Temporary enactments now provide additional paid leave options for employees beginning April 1, and there are many different ways this may impact businesses and their employees. Ultimately, to the extent a current employee is entitled to paid leave under the federal law, it would need to be exhausted before an employee collects unemployment benefits.

Megan Moritz is a partner at the BrownWinick Law firm and practices in Employment & Labor Law. Megan can be reached at 515.242.2455 or BrownWinick is a leading Midwestern law firm located in Des Moines, Iowa focused on supporting businesses in their day-to-day operations as well as guiding them through their pivotal moments. See more at