N.J. Bill Would Help Workers Whose Hours Are Shortened
July 17, 2009 | By Athena D. Merritt | Philadelphia Business Journal | Link to article
Legislation introduced in New Jersey last month could give struggling employers a means of avoiding layoffs. Proponents hope to make it law by early next year at the latest.
The proposal, known as "work share" would enable employers to reduce workers' hours and have the affected employees recoup a portion of the lost wages through unemployment benefits. To participate, employers would have to have a minimum of 10 full-time workers, reduce their weekly hours by at least 10 percent, sustain their existing benefits and not hire any additional employees.
Though the legislation (Senate Bill 2895) was introduced by Sen. Marcia A. Karrow, R-Warren/Hunterdon, who is leaving, having not won the Republican nomination, fellow sponsors are committed to it.
"We're in some very difficult times right now for a lot of reasons, and I look at this first and foremost as a way to keep people employed and hopefully on the other side of the equation we can help hold off businesses from leaving New Jersey," said Assemblyman John DiMaio, R-Warren/Hunterdon, who introduced the companion measure (Bill 4126) in the Assembly.
The legislation would provide an option for employers to cut salary costs, but hang onto highly skilled workers, Melanie Willoughby, senior vice president of government affairs for the New Jersey Business and Industry Association, said. Employers are already struggling under a $340 million tax increase that hit on July 1 to shore up the state's unemployment compensation fund, she said. About 350,000 are collecting state and federal unemployment compensation benefits in the state, compared to around 120,000 over the same period last year.
"It works itself out because you keep the employee in the work force, you are still paying them a portion of their salary and they are paying into the unemployment fund so it's actually a win-win to everyone," Willoughby said.
Currently, 17 states participate in work share programs. Pennsylvania and Delaware are not among them. With the state of the economy it's likely other states will begin offering them in the future, Neil Ridley, senior policy analyst at the Center for Law and Social Policy, said.
"I think because of the severity of the recession and actually the increasing attention to this approach in the last six months to a year, I expect more states to move in this direction," Ridley said.
"It's encouraging that New Jersey is moving to adopt a shared work program because I think it's an option that really should be in place for employers and workers in as many states as possible," he said.
While the programs do help employers to hang onto employees during an economic slowdown and help keep employees employed and receiving benefits, there are downsides, Ridley said.
"From a state perspective it is more complex to administer than the regular unemployment program," Ridley said.