Laying off employees can negatively impact both the company and the individual. While the company has no way of smoothly transitioning from its previous state to one without the same trained and qualified help, employees also often suffer greatly, experiencing the obvious loss of income and the emotional toll that such a situation can take.
Luckily, the Commonwealth of Pennsylvania has found a solution; a happy medium that allows for employers to reduce the work hours of a group of employees, while supplementing their lost wages using partial unemployment benefits instead of simply laying them off. Employees who are otherwise qualified to receive Unemployment Compensation (UC) and are covered by the Shared-Work plan will receive a set percentage of such compensation on a weekly basis while still working their reduced schedule.
A Useful Solution
Companies that utilize Shared-Work plans are able to cut down on expenses when a larger workforce is not necessary, but also quickly increase operations when one is. Doing so without recruiting, hiring, and training new employees saves the company time, money, and additional resources.
This is especially useful for companies (such as those selling winter heating oil or ice cream,) that see vastly different sales throughout various times of year. However, it can also be of great use to a number of small businesses. It secures jobs and prevents annual employee layoffs.
An employer is allowed to participate in the Shared-Work program so long as the Office of UC Tax Services finds that it has met the following qualifications:
- All UC tax reports have been filed;
- All amounts due under PA UC Law have been paid;
- A positive reserve account balance (for contributory employers) exists; and
- Wages for the last 12 consecutive quarters have been paid.
As of Fall 2018, there were more than 200 shared-work plans that had been put into action within the state.
Affected Units and Reduction Percentages
The employer is responsible for selecting which “affected unit” (department, shift, etc.) will be included in the Shared-Work plan. However, employers are permitted to have more than one plan if there is more than one unit that is affected. It is important to note though that employees who have been employed in the affected unit for less than three months, or those who would be working 40 hours or more per week under the plan are prohibited from participating.
The employer must also select by what percentage the affected unit’s hours are to be reduced. This is referred to as the “reduction percentage.” The reduction percentage is determined based upon the business needs of each specific business. However, the percentage must be no less than 20 percent and no more than 40 percent of the employees’ normal number of hours worked.
Unemployment Compensation Benefits
Each employee’s UC weekly benefit amount must be equal to the reduction percentage. This means that if an employee’s UC weekly benefit amount is $500 and his or her hours are reduced by 20 percent, the employee would receive 20 percent of $500, which would be $100 in Shared-Work UC benefits per week.
Have Questions? Calculating Destiny, LLC Can Help
At Calculating Destiny, LLC, we are a team of knowledgeable and experienced professionals that is dedicated to helping improve your business process. We work both on location and remotely, integrating into your existing team. Our ability to accurately and compliantly run your business allows you and your team to have a clear understanding of the challenges that may present themselves, how to over come them, and how to set and achieve tangible goals.
Through internal audits, process manuals, operations, and training & education, our number one goal is to help your company grow – even if that means outgrowing our services. To learn more about how we can help to put your business back on track for financial success, schedule a free consultation by visiting us online or calling us at 215-674-3430 today!