COVID-19 and Managing your Workforce through a Shared Work Program.

March 19, 2020

The COVID-19 pandemic and the subsequent shutting down of cities across the US has put an unprecedented amount of stress on state resources, people, and the businesses within those cities. Every person in the nation is dealing with similar issues: figuring out where the next rent check will come from, how to meet a mortgage payment, or lobbying for the landlord to take a flyer on this month’s lease. These issues all relate to a person maintaining their ability to earn an income during these trying times. For business owners, a potential solution may be closer than they believe. States-sponsor “Work Sharing” or “Shared Work” programs across the nation. These programs were created to help employers keep their employees during harsh financial times, instead of engaging in extensive layoffs.

The COVID-19 pandemic has caused the shutting down of cities world wide.

The Basics

Each Shared Works plan in each state shares basic traits. Typically, the employee maintains their job but must work fewer hours which enables the employee to apply for and receive some unemployment benefits. Business utilizing these programs during the COVID-19 pandemic achieves a multitude of goals: 1) it minimizes or eliminates the need for layoffs, 2) employees are kept in place so when customers return the business can quickly get back up to speed, 3) it avoids the need to train and hiring new employees as your valued employees are kept on with the company, and 4) it takes care of employee during an immense time of need.  Once businesses are allowed to resume their normal course, the ones that will be in the best position will be the ones that have maintained their high-performing employees throughout and thus are agile enough to pounce on opportunities at full strength as they present themselves. Both Texas and California have programs that serve as good examples of what you will find around the country, therefore we’ll provide a quick summary of each program and how you can start utilizing these essential resources.

Texas’s Shared Work Program

Texas’ program supplements employees’ wages lost because of reduced hours by replacing the lost funds with unemployment benefits. To qualify, an employer must simply submit to the Texas Workforce Commission (“TWC”) a Shared Work Plan. The employer should log into their account with TWC on https://twc.texas.gov/businesses/employer-benefits-services and follow the instruction contained here: https://twc.texas.gov/businesses/shared-work#applicationProcess. Seasonal businesses or seasonal hires do not qualify for this program. The plan must contain: 1) A reduction of hours for all employees contained within the plan by at least 10% of their hour total for the week, but it cannot exceed 40%; 2) At least 10% of the employees at the business or subsidiary must be a part of the plan; 3) It should detail how the affected employees will be notified of their new status; 4) Because this is an alternative to laying individuals off, the plan must detail how many employees will be laid off if the Shared Work programs is denied; 5) An affirmation that all employee benefits, like healthcare/retirement/paid vacation/sick leave, will continue to be provided to the affected employees; and 6) Affirm that employees will be able to continue to participate in employer-sponsored training.

Within a plan, different employees can have different percentages of hours reduced, meaning Employee A may have 10% of their hours reduced, while Employee B could have 40% of their time reduced. The amount of employees included in the plan can be modified by submitting an amendment to TWC, and employees within the plan can be laid off if the business continues to suffer financially. Finally, employees can maintain different plans for different departments or different lines of business. This would allow, for example, a company to have all employees with their hours reduced by 20% in one plan while another contains the employees with a 10% reduction.

Once the plan is created, submitted, and approved, the employee then must apply through TWC for unemployment benefits at https://twc.texas.gov/jobseekers/unemployment-benefits-services#applyForBenefits. The only requirement is that the employee would be qualified to receive regular unemployment benefits. If the employee’s application is approved, they would then begin to receive payment from TWC for the affection portion of their hourly wage. As an example of how an employee would be paid, if an employee has their hours reduced by 20%, they would receive 20% of the full unemployment benefit they would have received if they had been laid off by the business.

California’s Work Sharing Program

Similar to Texas’ plan, California supplements employees’ wages with unemployment benefits. An overview of the program is outlined here https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm and is maintained by California’s Employment Development Department (“EDD”). To qualify, an employer must submit a Work Sharing Unemployment Insurance Plan Application to the EDD, who requires the employer to fill out this application/form : https://www.edd.ca.gov/pdf_pub_ctr/de8686.pdf. The employer and plan must meet the following requirements: 1) The employer is legally registered to do business in California and have an active Employer Account Number; 2) Have at least 10% of the employer’s workforce or unit of the workforce (a minimum of 2 employees) affected by the reduction of hours; 3) The hours per week must be reduced by at least 10% but not to exceed 60%; 4) Employee benefits (like healthcare/retirement/paid vacation/sick leave) must continue to be provided; 5) If a union is involved the collective bargaining agent for the employees must agree to participate in the Work Sharing plan; 6) Identify the affected employees and how many employees would be laid off if not for the program; and 7) Provide Notice to employees about the Work Sharing Program.

Like Texas’ plan, seasonal or temporary business or employees do not qualify for this program. Unlike Texas’s plan the Work Sharing plan cannot be used as a transition to a layoff, meaning the employee cannot be placed in the program if they will be eventually be let go. A business can only have one Work Sharing plan, but within the plan can have employees with different amounts of hours that are reduced.  Once the plan has been created, submitted, and approved the employee then contacts the EDD to set up their benefits. The employee is only qualified if they are part of the regular, permanent workforce of the employer, and they have completed at least 1 week of normal hours and pay before requesting to be part of the Work Sharing program. Office and other high-ranking stock holders of the company do not qualify for the program.

As one can see, Texas and California have the support system in place to enable an employer to put together an action plan to maintain their current employees during a financial crisis, as the nation is experiencing now. The Work Sharing and Shared Work plans can vary in sophistication and size, thus providing a little or a lot of relief, depending on the needs of the business. Utilizing these programs may provide the much needed room to breathe for the employee and employer as we head for shelter together.

Nasir Pasha

By

Nasir N. Pasha is the managing attorney of Pasha Law, providing essential legal services and support to businesses and corporations in California, Illinois, New York, and Texas. He oversees all of the firm’s operations and is a pivotal force in maintaining client relationships and ensuring that each transaction is brought to its best possible conclusion.

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A business podcast with a legal twist

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