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Businesses dodge coronavirus-induced layoffs with shared work programs

Megan Henney

Businesses faced with laying off employees during the coronavirus pandemic and subsequent economic lockdown may have an alternative: A shared-work program.

Under a shared-work program, also known as a short-time compensation program, employers can keep workers on their payroll in a limited, part-time capacity. Those employees would still be eligible to collect a portion of their regular state unemployment benefits on top of the extra $600-a-week sweetener established by Congress in the CARES Act through the end of July.

The programs benefit employers because they can adopt cost-saving measures while maintaining their workforces but also minimize the financial harm to workers.

For instance, an employee in New York who’s had their hours and wages reduced will receive a percentage of their weekly benefits calculated based upon the percentage of work reduction. If a worker regularly receives $400 from unemployment and has their hours and wages cut by 40 percent, they’ll receive $160 of those benefits (in addition to their paycheck and the enhanced federal benefits).

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In states with high unemployment maximums, like Massachusetts, where the maximum weekly check is $823, it’s possible that workers may actually receive more money working part-time than they did full-time. An employee who makes $26,000 per year and experiences a 20 percent reduction in hours and income could receive up to $400 in state unemployment, $600 through federal coronavirus unemployment and their weekly wages, according to Jackson Lewis, a labor and employment law firm.

There are 27 states that currently offer work-share programs, according to the Department Labor: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington and Wisconsin.

Brewery Ommegang, located in Cooperstown, New York, is one of the businesses taking advantage of the program, according to its vice president of finance, Matt Szymanski.

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“Between the company continuing to pay [employees], as well as a combination of the state unemployment and federal unemployment, we’ve basically been able to keep the team intact,” he told FOX Business during an interview on Monday.

Still, it’s a frequently overlooked option. Less than 1 percent -- roughly 193,938 workers -- of the 29 million people collecting unemployment the week ended May 16 were participating in a work-share program, according to Department of Labor data published Thursday.

To participate, businesses need to submit a workshare plan to the state unemployment agency for approval; once it’s approved, the employer can then temporarily reduce hours and compensation for some -- or all -- of its employees, depending on the plan that it had drafted.

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Since a broad swath of the nation’s economy shut down to slow the spread of COVID-19, more than 43 million Americans have lost their jobs, a rate unseen since the Great Depression, according to weekly jobless claims tracked by the Labor Department.

However, unemployment unexpectedly dropped to 13.3 percent in May, down from 14.7 percent in April, signaling a faster and stronger rebound from the shutdown than once believed to be possible.

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