There is a way to retain staff and stabilize your workforce while weathering the ups and downs of the recession: About 20 states offer work-share programs that allow employers to compensate participating employees for wages lost due to reduced work hours. These programs are ideal for remodelers, many of whom have had to cut employee hours.
Work share, also known as shared work or short time, is a program within the state’s unemployment office that is not the same as partial unemployment (see “Partial Unemployment or Workshare?” below). Neil Ridley, of the Center for Law and Social Policy, says that the program is beneficial for both employer and employee. And, in helping avert layoffs, it keeps more people employed, which benefits state economies.
California was the first state to adopt a work-share program in 1978, but other states followed and the concept received renewed attention during downturns in the 1980s and 1990s. “It is a layoff aversion program and layoffs are much less noticeable and widespread when the economy starts to better,” Ridley says, noting that there has been a marked increase in the number of employers applying for work-share programs since 2007.
For Washington state the shared-work program saved at least 22,000 jobs in 2009. In a 2009 survey, nearly 60% of participating employers said the program had helped their business survive the recession. In 2010 three states passed legislation to adopt the program: Colorado, New Hampshire, and Oklahoma. Pennsylvania and Ohio have pending legislation (see map at right).
Florida’s Short Time Compensation Program (STC) was created by the legislature in 1983. Robby Cunningham, communications director for Florida’s Agency for Workforce Innovation, says the STC is a temporary bridge that helps employers reduce operating costs without laying off employees. “It helps them maintain existing staff so when they return to higher productivity, they don’t have to recruit/hire/retrain,” Cunningham says.
Human resources consultant Richard T. Rossignol, principal of RTR Consulting, in Thousand Oaks, Calif., says that the main advantage of these types of programs is that they help companies retain skilled employees. “You don’t want them to leave — because when business comes back, they will not return to you,” he says.
State By State
Each state has its own rules for a company to qualify for work share. Most require that employers fill out an application. Employees start receiving compensation within one to two weeks after application approval.
Florida employers are eligible if they reduce normal hours by 10% to 40%, with at least 10% of employees working reduced hours. Participating employees must have worked a minimum of 32 hours per week before the layoffs. Employees may be rotated on and off the plan as long as 10% of the company’s employees are working reduced hours each week.
In Washington, participating employees’ hours can be reduced by no more than 50%. The plan can last up to 12 months, and the employer can reapply.
California’s Work Sharing Unemployment Insurance must involve the participation of at least two employees and at least 10% of the workforce, with a minimum of a 10% reduction in both hours worked and wages earned for each participating employee. The work-sharing plan is approved for six-months. The state’s Employment Development Department says employees may be rotated so that different individuals have reduced hours and wages each week.
When Dennis Allen of Allen Associates, in Santa Barbara, Calif., cut staff hours by 15% to 25% during the last six months of 2009, he applied for the state’s work-share program. He says employees received about 30% to 40% of their lost wages. “Once we were registered and enrolled, they got paychecks pretty quickly from the state unemployment office,” he says, and by early 2010, all had been restored to full hours and compensation.
Previous to providing outsourced human resources for small- to medium-size companies, Rossignol worked in HR for 25 years at the vice president–level for various companies. He had made use of the California program at a previous company where he worked, which had cut employees from a five-day to a four-day workweek. Employees at that firm were happy that their employer came up with a plan rather than laying off staff.
Unlike regular unemployment, which is filed by the employee, with a work-share program the employer must submit paperwork that tracks employee hours. “The company is the approval source,” Rossignol says. He created an Excel spreadsheet that he would submit to the Employment Development Department each week. Ridley also points out that the benefits of the program far outweigh the downside of administrative requirements and paperwork.
Most work-share programs allow employees to maintain benefits, including health care. Rossignol approached the company’s health care provider at the time and said the company had redefined the working hours needed to qualify for health care from 40 hours per week to 32 hours, and the contract was changed. But, he says, in some cases that’s not necessary.
California also has a Training Panel program that helps employers provide training for employees. “Both programs are fantastic,” Rossignol says, but 80% of employers don’t know that they exist.
—Nina Patel, senior editor, REMODELING.