Streamlined Work Sharing Program Offers Alternative to Layoffs

As California businesses continue to struggle to maintain their workforces during COVID-related closing and reopenings, employers should keep in mind California’s underutilized work share program, streamline by last year’s AB 1731 (Boerner Horvath; D-Encinitas).

Work sharing is an unemployment insurance (UI) program that allows employers to reduce employee hours during an economic downturn while allowing employees to receive UI benefits to replace their lost wages.

Reduced Hours

Simply put, the program allows employers who are facing layoffs to identify those potential layoffs to the state, and instead lay out a plan to reduce hours for employees. The state then provides the employees whose hours have been reduced hours with unemployment insurance benefits to compensate them for a portion of their lost wages.

The program allows employers to keep valuable employees on the books at a reduced schedule, while also easing the reduction for their employees.

To apply, employers must submit a plan up front showing that they meet the basic requirements, including outlining which employees will have a reduced schedule, providing certain basic business information, and providing an estimate of layoffs that would have occurred if not for use of the work share program.

Additional details and requirements are listed on the Employment Development Department (EDD) website at https://edd.ca.gov/Unemployment/Work_Sharing_Program.htm.

Streamlined Program

California’s work share program has been in place since 1978 but had become somewhat outdated as the program still required paper mailing of an application and was plagued by slow response times. Last year’s AB 1731, supported by the California Chamber of Commerce, addressed many of these issues, and means employers should give the program another look.

  • First, AB 1731 requires EDD to create an online portal and provide forms online to ease employer access.
  • Second, in order to cut down on the review and approval timing, AB 1731 provides for rapid approval of all work share plans for their first year, with the caveat that employers bear responsibility for making sure the submitted information is accurate.
  • Third, it sets out strict timelines for responses from EDD to ensure that employers who choose to utilize the program can do so efficiently. Specifically, it requires the EDD to send claim packets to employers who utilize the program within five days of an application being submitted.

Taken together, these changes mean employers can — when looking at potential layoffs and loss of valuable staff — quickly submit a work share plan, get approved, get the necessary forms to use the program, and then reduce the time for their employees while ensuring the employees get UI to help cover some of the difference in wages.

Of course, delays in response time may still persist, as EDD remains somewhat overwhelmed by the scope of this pandemic. But that said, the web portal appears to be in place and working, and that is one huge step toward streamlining this program for employers.

The CalChamber encourages employers that are considering layoffs due to COVID-19 to look to California’s work share program as an alternative in the coming months.

Staff Contact: Robert Moutrie