Saving Jobs Through a Work Share Plan

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:

• Employers to reduce employee’s wages or hours in lieu of a layoff or total furlough.
• Employees to remain employed by the Company but are eligible to receive unemployment (UI) benefits.
• Employers to get assistance while going through financial difficulty.
• Employees not to have to seek other employment in order to be eligible for UI benefits.

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.

 

Employer Requirements

 

To participate, employers must meet all of the following requirements:

• Be a legally registered business in California
• Have an active California State Employer Account Number
• At least 10% of the employer’s regular workforce or a unit of the workforce, and a minimum of two employees, must be affected by a reduction in hours and wages
• Hours and wages must be reduced by at least 10% and not exceed 60% per employee
• Health benefits must remain the same as before, or they must meet the same standards as other employees who are not participating in Work Sharing
• Retirement benefits must meet the same terms and conditions as before, or they must meet the same as other employees not participating in Work Sharing
• The collective bargaining agent of employees in a bargaining unit must agree to voluntarily participate and sign the application for Work Sharing
• Identify the affected work units to be covered by the Work Sharing plan and identify each participating employee by their full name and Social Security number
• Notify employees in advance of the intent to participate in the Work Sharing program
• Identify how many layoffs will be avoided by participating in the Work Sharing program
• Provide the EDD with any necessary reports or documents relating to the Work Sharing plan

 

Restrictions

 

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)

 

• File DE8686 by mail, which becomes effective on the Sunday of the week before the application is filed
• Set up takes about 10 days (may be delayed due to the influx of new applications)
• EDD Special Claims Office will send a letter of approval
• EDD will mail claim packet for each participating employee, and a ten-week supply of weekly certifications for each employee
• Employer issues certifications to affected employees each week for the duration of the program
• These forms must be mailed into the EDD weekly
• A Work Share Plan can remain in effect for one year before it must be renewed
• Benefits to be paid weekly, proportionate to the percentage of reduction in hours and wages

Employer Considerations

 

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.