New York State is encouraging employers to consider its Shared Work Program as an alternative to laying off employees. The program allows employers to keep employees during a temporary slowdown by allowing employees to work reduced hours while receiving partial unemployment insurance benefits. Full-time, part-time and seasonable employees are eligible.
Shared Work Plan
To take part in the Program, an employer must first design a Shared Work Plan. The Shared Work Plan must:
- Apply to employees who normally work no more than 40 hours per week;
- Include the names, social security number, and normal weekly work hours of all participating employees, and whether they are seasonal, temporary, or intermittent employees;
- Reduce work hours and corresponding wages between 20% to 60%;
- Replace the layoff of an equal percentage of your workforce;
- Not reduce or eliminate fringe benefits, unless they are reduced or eliminated for the entire workforce;
- Not extend beyond 53 weeks;
- Cover all employees in an affected unit and reduce their hours by the same percentage. Employers may reduce different units by different percentages;
- If there is a collective bargaining agreement in effect, the collective bargaining unit must agree to take part in the Shared Work Program.must provide employees with unpaid sick leave for the duration of the mandatory or precautionary order of quarantine or isolation.
Applications should be submitted one to four weeks before the start date of the plan. To file the application, employers may apply online at the www.labor.ny.gov website. Employers must also complete the Shared Work Plan Application (Form SW-2.1) and the Shared Work Plan Participant Listing (Form SW-2.2) which are also available online.
Employee Benefits and Eligibility
Employees may participate in Shared Work if they are eligible to receive regular unemployment insurance benefits in New York State. The Shared Work benefit is the person’s weekly unemployment benefit rate multiplied by the percentage their hours and wages are reduced. Workers participating in the Shared Work:
- May receive a maximum of 26 weeks of Shared Work benefits during a benefit year;
- May not receive more in a benefit year from Shared Work benefits combined with regular unemployment insurance benefits than they would receive under the regular unemployment insurance program alone (26 times the regular benefit rate);
- Must be fully available to work for the Shared Work employer, but are not required to look for other work;
- Are not eligible for Shared Work benefits in any week in which they receive Supplemental Unemployment Compensation benefits (SUB pay) as defined in section 501(c)((17)(D) of the Internal Revenue Code;
- Will have their Shared Work benefits reduced if they work for a different employer or work at self-employment.
EXAMPLES OF BENEFITS UNDER THE SHARED WORK PROGRAM
|Under Total Unemployment||Under Shared Work|
|Employee earns $400 weekly||$200 unemployment benefit rate||20% Reduction: $360 weekly
· $320 weekly wages
· plus $40 Shared Work benefit
(20% of $200)
|40% Reduction: $320 weekly
· $240 weekly wages
· plus $80 Shared Work benefit
(40% of $200)
|60% Reduction: $280 weekly
· $160 weekly wages
· plus $120 Shared Work benefit
In order to qualify, employers must employ at least two full-time employees working in New York State. For four consecutive calendar quarters, the employer must have paid unemployment insurance contributions. In lieu of contributions, elected to reimburse benefits paid to former employees.
If approved, the Shared Work Plan begins on the date specified on the application, or the first Monday following approval of the Plan, whichever is later. A Shared Work Plan cannot be retroactive.
Modifications to the Shared Work Plan
Once approved, an employer may change the percentage that their employees’ hours are reduced as long as it is between 20% to 60% reduction. As a result, employers may not split entire weeks among employees such that they are working 0% or 100% reduced weeks. An employer may however return all workers within a unit to a full schedule for a week or more and then resume the Plan with reduced hours.
If people in the affected work unit leave, the employer may hire replacement workers. However, an employer may not hire additional workers in an affected unit or add additional work units to the Plan without submitting a modified application for approval.
Employers may lay off some workers who were originally in the Plan and still keep the remainder on the Plan. This would still prevent the layoff of those who remain, which is the program’s intent.
Need Not Affect the Entire Company
Employers may use Shared Work in one or more departments, shifts or units. The Plan lets the employer choose the areas involved. However, employers must apply reductions in hours and wages equally to all of the employees in a participating unit or department. Employers may reduce the hours and wages of employees of different departments or units by different percentages, if specified in the Plan. An affected unit must have at least two employees in the Plan. Corporate officers cannot be included in the Plan.
Each week, both the employer and participating employees must certify the Shared Work benefits. This makes sure that each employee is paid the proper Shared Work benefit amount.
If the Plan is not needed for any particular week that employees’ work and wages are not reduced, neither the employer nor participating employees certify for that week.
Impact of the CARES Act
On March 27, 2020, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act promotes the use of short-time compensation (STC) arrangements such as the New York’s Shared Work Program and provides funding to support such programs. Under the CARES Act, the federal government will reimburse states that have a pre-existing STC program, such as New York, for the total STC benefit costs, up to a maximum of 26 weeks for each participant.
Moreover, employees participating in an STC program will be able to supplement their partial unemployment benefits with the additional $600 per week Pandemic Unemployment Compensation (PUC) benefit through July 31, 2020. The PUC does not constitute a supplemental unemployment benefit which would otherwise disqualify an employee from participating in a STC. In the examples above, $600 would be added to the weekly benefit amounts through July 31, 2020.
Federal reimbursement for regular benefits paid under a state’s STC program is available through December 31, 2020.
* * *
If you have any questions regarding this alert, please do not hesitate to contact us.