‘Shared-Work’ Program Gets Little Use Despite Averting Layoffs, Benefiting Employers
The coronavirus crisis has forced companies across Pennsylvania to cut workers’ hours. But thanks to a little-known program called “shared work,” some of those businesses have kept their staff off the unemployment line.
In a shared-work arrangement, an employer can avoid laying people off by temporarily reducing hours for an entire department or shift. Each of the affected employees then receives unemployment compensation for the hours they lose.
“So instead of having one employee still working 40 hours and another one being cut, they … both work 20 hours,” said Susan Dickinson, director of compensation benefits policy for Pennsylvania’s Office of Unemployment. “Everyone gets to keep their jobs, even at a reduced amount of work. And employers can then continue filing the [unemployment] claims for them every two weeks to have them receive payments.”
Work sharing has gained popularity amid the COVID-19 pandemic, largely because it allows businesses to retain staff who are already trained and familiar with their workplace.
“In the big picture, it’s definitely more cost-effective to not have to replace staff,” Dickinson said. “No one wants to spend the time training someone, having a relationship with someone, and then having to cut them and lose them.”
Dickinson noted that the program also allows employees to continue to access job benefits rather than losing them outright along with their jobs.
The federal government, meanwhile, has thrown support behind the concept: The CARES Act, enacted in the spring, covers the full cost of unemployment benefits paid through shared-work programs through the end of the year. The aid offers some relief to a system otherwise overwhelmed with individual unemployment claims that threaten to strain Pennsylvania’s unemployment compensation trust fund.
In Pennsylvania, 155 employers have signed up for the work-sharing program, compared to only a handful before the pandemic, according to Dickinson. She said businesses taking part in the program today represent about 4,600 employees – a tiny fraction of the 886,000 Pennsylvania workers who were unemployed in July.
Dickinson said many employers simply don’t know about work sharing. However, her office launched a marketing campaign in July to raise awareness. The office received federal funds to run the campaign.
Dickinson noted that eligibility criteria prevent some firms and workers from participating in Pennsylvania’s shared-work program. For example, employers must submit a proposal to the state unemployment office for cutting between 20 and 40 percent of hours within a specific work unit, and have those plans approved. Participating firms also must be in good standing when it comes to paying unemployment taxes. And they are required to have paid wages continuously for the last three years.
Employees, meanwhile, must financially qualify for unemployment compensation to receive shared-work benefits.