I met today with the head of a large manufacturing company in Connecticut who has avoided laying off workers despite a severe downturn in his business due to a “great’ program the State of Connecticut offers.
Here it is:
Connecticut’s Shared Work Program
(NY Times profile of the program here)
OVERVIEW
Shared work is a voluntary program providing an alternative to layoffs for employers faced with a temporary decline in business. Rather than laying off a percentage of the work force to cut costs, an employer may reduce the hours and wages of all or a particular group of employees. The employees whose hours and wages are reduced can receive partial unemployment insurance benefits to supplement their lost wages. These partial benefits are made possible through special eligibility regulations governing the Shared Work Unemployment Compensation Program.
PROGRAM HIGHLIGHTS
Employers
* The employer must have four or more full time employees participating in the plan.
* The employees must have a reduction in hours and a corresponding reduction in wages of not less than 20 percent and no more than 40 percent of full time norm.
* The employees fringe benefits cannot be reduced nor eliminated during the plan.
* The plan must be in lieu of a layoff of an equivalent percentage of employees.
* All participating employees must be identified by name and Social Security number.
* The plan applies to only full time permanent employees
Employees
* An employee must be able to work and available for full time work with the participating employer.
* An employee must be eligible for regular unemployment compensation.
* No employee may receive a combination of shared work benefits and regular unemployment compensation benefits that exceeds the legal maximum total benefits payable to the claimant during the course of his benefit year.
EXAMPLE OF HOW THE SHARED WORK PROGRAM WORKS
A firm facing a 20 percent reduction in production might normally lay off one-fifth of its work force. Faced with this situation, a company with a shared work plan could retain its total work force on a four-day-a-week basis. This reduction from 40 hours to 32 hours would cut production by the required 20 percent without reducing the number of employees. All affected employees would receive their wages based on four days of work and, in addition, receive a portion of unemployment compensation benefits equal to 20 percent of the total weekly benefit rate that would have been payable had the employee been unemployed a full week.
Using this example, an employee who normally works 40 hours a week would have his/hers schedule reduced by 20 percent. The employee qualifies for regular unemployment compensation for that one day he/she is not at work at a weekly benefit rate of $450:
20% of $450 = $90
The employee would receive $90 from his/her unemployment benefits in addition to the 32 hours of wages earned from the employer during the week.
PROGRAM ADVANTAGES
Employers
* Keep your skilled, trained workers because the shared work program lets you:
* Retain all workers
* Maintain the continuity in your skilled work force.
* Be prepared for business upswings because your work force remains in place.
* Avoid the time and expense of training new employees when business turns around.
* Foster better morale in your employees because you avoid the insecurity, unrest, and bumping characteristic of most layoffs.
Employees
* Retain your job and maintain economic security.
* Avoid emotional and financial hardships caused by a layoff.
* Retain your health insurance and retirement benefits.
* Maintain your employment skills and be available for advancement opportunities.
* Avoid the difficulties of looking for a new job.
