Work Sharing In Lieu Of Lay offs? It May Be The Answer!
The Employment Development Department offers a work sharing unemployment insurance program. This program allows for the payment of Work Sharing Unemployment Insurance benefits to individuals whose wages and hours have been reduced. The program is considered a temporary and practical alternative ro layoffs. As an example, an employer with 100 employees finds it necessary to lay off 20 employees. However, rather than lay off these employees, the employer participates in the Work Sharing program. The employer gets to keep all 100 employees on the payroll but reduces the workweek from 5 days to 4 days, thereby achieving the same desired 20% reduction in payroll. All 100 employees continue to earn wages for four days and also be eligible for Worksharing benefits for the fifth (nonworking) day. The employer gets to retain all of the trained staff and can always go back to a full week when business improves.
The employee benefits as well. As an example, an employee who normally works a five-day workweek and is paid $200. If this employee’s workweek is reduced to four days, the employee’s weekly wages would be $160. This is a 20% reduction in wages and hours. The work Sharing benefits for this employee are 20% of the Unemployment Insurance benefits the employee would receive if the employee would receive if the employee were totally unemployed. If the employee’s weekly benefit is $91.00, the employee would qualify for $18.00 in Work Sharing benefits. This results in a reduction in gross wages of only $22.00 for that week ($160 + $18=$178).
Any employer may participate who has a reduction in production, services, or other conditions that cause the employer to seek an alternative to layoffs may participate in the Work Sharing program. The specific requirements are simple. A minimum of two employees, comprising at least 10% of the employer’s regular work force or a unit of the work force, must be affected by a reduction in wages and hours worked. Second, the reduction in wages and hours worked also must be at least 10%.
To participate in the program the employer needs to contact the EDD and and complete a “Work Sharing Application.” All work sharing plans are approved for a six-month period. For further information call 916-464-3300.
