THE NEW SHARED WORK PROGRAM MIGHT BE YOUR SOLUTION DURING THE COVID-19 PANDEMIC
It is possible that many of you might not be aware that the CT Department of Labor (CTDOL) already has regulations in place known at Shared Work Program which was enacted to specifically to address any unexpected and sudden downturns in your business, such as the one we are all currently experiencing. While the scenarios for devising such legislation likely did not contemplate a Covid-19 pandemic, CTDOL has been promoting this platform in recent days to inform and remind businesses of this vital option available to them. For one, this program addresses the question that we have been getting repeatedly, “Are employees entitled to unemployment if they have not been terminated but are working fewer hours and making less money?”
This platform also provides a strategy for businesses who want to keep employees employed while they ride out the storm, but are not in a financial position to currently provide them with their regular full compensation. Although all non-essential businesses are currently shut down, with President Trump declaring that he wants businesses back open and people returning to work on April 12th, the option of a shared work arrangement might be something to start to think about as both employers and employees consider the most optimal strategy for re-entry into MAKING MONEY.
HOW DOES IT HELP EMPLOYERS?
Shared Work is a voluntary program that helps employers during business downturns by providing an alternative to layoffs. Shared Work allows the employer to reduce work hours and pay for an entire group of affected employees rather than laying off across the board. To qualify, the business’ reduction of work cannot be less than 10 percent or more than 60 percent, however, it would not be surprising if those percentage requirements experience may get modified, in light of the recent events.
The program allows employers to pay partial unemployment benefits and partial pay as an alternative to a full termination which would result the employer’s obligation to pay full unemployment benefits to displaced employees. Further, by reducing hours as opposed to laying off employees, the relationship between employer and employee remains intact. This ensures that these employees will be available for regular hours when business picks up by keeping them on staff while providing them with reduced pay and partial unemployment benefits (and even fringe benefits) during a downturn or in this case, a total shutdown.
Whether a small business or a large manufacturer, the Shared Work Program can save the employer the time, worry and expense of having to hire and train new workers by keeping skilled and experienced workers on the job until business upturns. In light of current circumstances, this will allow for a smoother, quicker and more efficient return to normal business once the shutdown has been lifted. Searching for, training and onboarding new employees is a laborious process. Shared Work affords employers the opportunity to pick up where they left off as far as staff is concerned. The last thing employers are going to want to deal with once given the green light to reopen are delays in earning revenue caused by first having to find and train qualified employees, not to mention the expenses associated with the search and hiring process.
To participate, an employer must complete an application for the affected groups of employees or departments within the company and submit it to the CT Department of Labor for approval.
Our firm has become well versed in this program and are here to help answer any of your immediate questions, complete applications for you or provide ongoing counsel throughout the process.
HOW DOES IT HELP EMPLOYEES?
The Shared Work Program is an effective alternative to an employee’s full termination during what is already a most difficult and stressful time for everyone. Rather than being laid off, employees work a reduced number of hours and receive a portion of their compensation and a portion of their weekly unemployment benefit payment. The employer submits a weekly report to generate the employee’s unemployment payment. The employee does not have to file anything. In essence, the employee continues working while collecting unemployment benefits to supplement the lost or reduced wages. The Shared Work payment is based on the percentage of the reduction. For example, if an employee normally works 40 hours per week and earns $20 an hour, under the Shared Work program, if the employee’s hours are reduced by 20 hours per week (a 50% reduction), the unemployment benefit would be reduced by 50%.
To show how this can result in more money in an employee’s pocket, if the employee in the above scenario was totally laid off, they would be entitled to $400/week in unemployment benefits. However, under the Shared Work program, if they worked and earned 50%, they would receive $400 in pay ($20 hour x 20 hours) and $200 in unemployment (50% of the total benefit). So, they would be receiving $600/week instead of $400/week AND they would have a job to return to!
Under this program, the employee would also be entitled to fringe benefits such as health, retirement benefits, and union seniority (if applicable).
Our firm has become well versed in this program and are here to help answer any of your immediate questions, assist you in alerting your employer about the existence of this program, provide you with ongoing counseling throughout the process or help you with any of your employment needs.