This article was written by Bern Lefson, SCORE Orange County Management Counselor
In these difficult economic times, the California Employment Development Department (EDD) has a program that may help alleviate some of the financial burden and aid in retaining key employees. The Work Sharing Unemployment Insurance program allows for the payment of benefits to individuals whose wages and hours have been reduced. The basic purpose is to avoid layoffs and, for temporary situations lasting for a reasonable period of time, to share the available work and make up lost wages through eligibility for unemployment insurance payments.
This Program is practical and helpful by providing employers to quickly gear up when business conditions improve. Employers are spared the expense of recruiting, hiring, and training new employees. Employees are spared the hardship of total unemployment. For employers who must reduce their workforce, this Program may be used as a transition to the workforce reduction. Affected employees can continue to be employed while seeking other employment prior to the effective date of the layoff.
Work Sharing is flexible. Employees may be rotated so different employees have reduced work hours and wages each week. The Program allows the employer to determine which week(s) will have hours and wage reduction. The employer also may designate which employees are to participate.
A Work Sharing plan is approved for a six month period. If, at the end of six months, there is a need to continue the plan, a new application must be filed. Such a new plan may be approved to be effective immediately following the original plan expiration.
Eligibility and approval of the employer’s plan requires the following:
- The Work Sharing plan must be submitted to EDD for approval using Form DE 8686.
- Benefits cannot be paid prior to the approval of the plan by EDD.
- The employer’s Work Sharing plan must include at least two employees and 10% of the workforce or work unit.
- There must be at least 10% reduction in hours worked and wages earned for each participating employee.
It is recommended that anyone interested in the Program contact EDD for more information and for the required Form(s). Call the Employment Development Department at: (916) 464-3343