Frank Levesque & Jonathan B. Fagan | April 30, 2020
It’s no secret that the decisions employers have had to make since the onset of the COVID-19 pandemic have been perhaps the most gut-wrenching of their careers – most notably those decisions around employee layoffs. Many of these same employers are encountering these challenges for the first time and as such are in very unfamiliar territory.
What are Workshare Programs
Employers contemplating partial or full layoffs aren’t always aware of the availability of reduced hours or “Short-Time Compensation (STC)” programs as an alternative to layoffs. Commonly referred to by participating states as “Workshare” or “SharedWork” (not to be confused with “Job Sharing” arrangements where a job’s duties are split between two employees), the spirit of these programs is to keep employees working while also allowing them to receive partial unemployment benefits for a portion of their reduced hours. The recently enacted CARES Act provides for federal reimbursement to states with existing workshare programs up to a maximum of 26 weeks for each participant. For states without an existing workshare program, the federal government will reimburse one-half of the workshare benefit costs, up to a maximum of 26 weeks for each participant.
The potential benefits of workshare programs for employers include:
- Minimized disruption to business operations
- Continued productivity, bolstering cash flow
- Retention of skilled talent, reducing costs of having to hire and train new staff
For employees, the potential benefits include:
- The ability to recoup some of their lost hours
- Employees whose earnings, even after reduced hours, would ordinarily exceed that state’s maximum earnings threshold, are able to participate
Courtesy of the CARES Act, employees receiving unemployment benefits are also eligible to receive an additional $600 Federal Pandemic Unemployment Compensation (FPUC) payment through July 31st.
Not all states offer workshare programs (27 in all, including all six New England states as well as New York and New Jersey). Connecticut’s “SharedWork” is one such program, an example of which is as follows:
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Employers must apply for workshare programs, (not employees) and certain requirements must be met. For example, Massachusetts’ WorkShare Program establishes employer requirements that include the following:
- You must be up-to-date with your unemployment insurance contributions
- You must have filed employment and wage detail reports
- Your employees must be permanent full-time or part-time workers (seasonal and temporary employees may not take part in the plan)
- The number of employees affected by the plan must be at least 2
- The duration of the plan can’t be more than 52 weeks
- You must continue to provide the same health insurance and retirement benefits to affected employees
- The union must agree to the WorkShare plan if employees are covered by collective bargaining
While there are many commonalities between state workshare programs there are also differences, therefore a close examination of a respective state’s guidelines and requirements is important. For example, while CT and MA require a reduction of hours between 10% and 60%, Rhode Island’s Workshare Program allows up to 50%. Further, affected employees in Rhode Island must certify that a written copy of the plan, or a summary thereof, was made available to them for inspection and comment for at least seven days.
Generally, during each week, affected employees are employed as a member of an affected unit under an approved workshare plan which was approved prior to that week, and the plan is in effect the week for which benefits are claimed. Additionally, employees must:
- Be able to work and available for the normal work week with the workshare employer.
- Work all the hours offered by the workshare employer in any given week up to the employee’s usual weekly hours.
Employers considering workshare programs should be mindful of its interaction with and potential impact on federal stimulus programs such as the Paycheck Protection Program (PPP), where loan forgiveness is based on the ability to maintain certain payroll and headcount levels. The administrative burden in maintaining the program as well as potential risks associated with reducing hours for exempt employees should also be taken into consideration.
For more information on workshare programs in your state contact blum’s HR Advisory team by clicking here.
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