Shared-Work Programs: A Little Used Alternative to Layoffs
September 02, 2009 | Washington Employment Law Blawg | Link to article
In today's economy, many employers are faced with the challenge of retaining their employees but reducing costs. According to the Center for Law and Social Policy (CLASP), even if economic growth resumes, the job market is not likely to fully recover until mid-2010 or beyond. What is an employer to do until that happens?
Shared-work programs offer employers an alternative to layoffs. The program allows an employer to reduce the work hours of its full-time employees, while the employees collect partial unemployment benefits to replace a portion of their lost wages. Seventeen states offer some type of shared-work program: Arkansas, Arizona, California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Maryland, Minnesota, Missouri, New York, Oregon, Rhode Island, Texas, Vermont and Washington.
Each state's program is a little different, but they have common attributes. In Washington State, a business must submit an application and participant list. An employer must reduce the weekly work hours of its participating employees by at least 10 percent, but not more than 50 percent. The health benefits that an employer provides to its employees must continue as though the employer did not reduce its work hours. The employer must designate a company representative to manage its shared-work plan. If the company is represented by a union, the collective-bargaining agent must approve the plan in writing for the participating employees. Your state labor department's website, such as Washington's Employment Security Department, will get you started on seeing if this program meets your needs.
As with anything, there are benefits and costs associated with shared-work programs.
- The employer avoids the expense of rehiring and retraining later
- The employer avoids the anger and drop in productivity associated with layoffs
- The employer avoids severance payments
- Employees get to keep their jobs and they receive replacement wages for a portion of what they've lost
- The state reduces the number of laid off workers
- Employers will have higher unemployment insurance tax rates
- Employees will burn through their unemployment insurance benefits
On August 7, 2009, Senator Jack Reed (D-RI) introduced the Keep Americans Working Act (S. 1646). For a period of two years, the bill would provide states with temporary financing for 100 percent of the work-share benefits paid to employees for up to 26 weeks. The bill has been referred to the Senate Committee on Finance.