The entire world is vigilant as the COVID-19 pandemic enters the workforce leaving business after business to make urgent and substantial changes. Many businesses will be forced to make difficult decisions to reduce their workforce either partially or completely.
Since 1978, California has offered employers experiencing a temporary slowdown the opportunity to enroll in a Work Share program managed by the EDD, potentially saving many jobs.
If your business currently has a workforce who is willing and able to work, but your business is slow, the Work Sharing program may be a viable option. This program allows:
This is a win-win for everyone as businesses are able to retain their talent, avoiding the cost of recruiting, hiring, and retraining while assisting their workforce through a difficult unprecedented time.
Work Sharing Claim vs. Unemployment Insurance Claim
The difference in work sharing versus unemployment claims for employees with reduced hours is potentially more money in their pockets. Under the Work Sharing plan, the employee will be eligible for a percentage of the wages lost based on the approved weekly benefit amount. If they file outside the program, the employee may not be eligible at the same rate because the reduced wages may not be enough to generate a claim.
This example from the EDD is instructive:
An employee who normally works five days a week for $500 is reduced to four days a week for $400. The Work Sharing benefits for this employee would be 20% of the benefits the employee would receive if unemployed. If maximum UI benefits for this employee would be $300, the employee would qualify for $60 in Work Sharing Benefits, bringing their weekly pay to $460.
An employee can still be a part of the Work Sharing plan if they have been reduced by more than 60% or have no hours of work for up to three weeks. In this case, the employee could receive up to the approved total weekly benefit amount. If the employee remains unemployed by more than 60% or with no hours after three weeks, the claim will transition to a regular unemployment claim. The employee can, however, return after three weeks of no work, work for a week (or take PTO/Vacation), and then restart another three-week period of no hours. The employer also has the flexibility to shift schedules intermittently between reduced hours and no hours.
Employers participating in the Work Sharing Program must provide a list of all employees who might apply to assist the unemployment office from inadvertently treating your employee’s Work Share claim as a regular UI claim. Communication and constant contact with the program office is critical in order to avoid termination of the Work Share plan.
To participate, employers must meet all of the following requirements:
There are some restrictions to the program. Leased, intermittent, seasonal, or temporary service employees as well as corporate officers or major stockholders with investment in the company are unable to participate. Although an unintended layoff may occur, the Work Share Program should not be used as a transition to layoff.
Application Process (subject to change)
The Work Share Program has been operating for over 40 years, assisting employers during economic hardships. CEA suggests that employers thoughtfully consider this program, as it may assist in a smoother transition back to a full workforce. The employer’s unemployment insurance tax rate result will be the same under this program as it would be if they perform layoffs, should employees file for unemployment.
Although the administrative process may seem daunting, businesses should analyze the program to see if this is a viable solution to what may be a short term disruption.
Visit EDD’s Work Sharing Program for more information.