If you didn’t know about Connecticut’s Shared Work Program before the pandemic, you weren’t the only one. Over the last few years, only a small handful of employers statewide had even taken advantage of the program. Since the start of the pandemic, however, over 700 employers have applied for the program and over 500 of those applications have been approved. Why has it become so popular? What do employers need to know about this program, and what are some pitfalls with the application process?
Based on information discussed in an April 14, 2020 webinar featuring Daniel A. Schwartz and CTDOL Principal Attorney Steven Lattanzio, and our own analysis of and experience with this program, we offer the following guidance for employers.
What is the Shared Work Program?
It is a program run by the Connecticut Department of Labor, and is described as “providing an alternative to layoffs for employers faced with a temporary decline in business. Rather than laying off a percentage of the workforce 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.”
What are the advantages to the Shared Work Program?
By reducing hours instead of terminating employees, employers can be prepared to “turn on the switch” instead of having to hire new employees when business picks up. The plan allows flexibility for employers, as the reduction of work can change week to week and from unit to unit as long as it stays between 10% and 60%. The plan also allows for different reduction levels for different employees within a unit.
The program also benefits employees, who get to stay with their employer, continue to receive their fringe benefits, and also collect partial unemployment compensation at a higher rate than if their hours were reduced outside of this program. An employee can potentially receive a maximum of 52 weeks of Shared Work benefit during a single benefit year.
What are the eligibility requirements?
This program is available to an employer if:
- The employer is reducing the hours of two or more employees in a business unit;
- The number of affected employees is greater than 10% of that unit;
- Those reductions will be between 10% and 60%; and
- The employer is up to date with their unemployment payments or reimbursements.
What is required to participate?
Employers need only fill out a fairly simple two-page application, a link to which is available here. For non-unionized workplaces, the employer makes the plan or a summary thereof available to affected employees and allows them a seven-day period to comment. Any employee comments must be provided to the CTDOL with the application.
What should employers know about filling out the application?
According to correspondence directly from the CTDOL, here are the most common pitfalls that employers fall into when filling out the application:
- Make sure the application is complete; no skipped questions.
- For Question 10: Make sure to list the percentage of reduction as 10%-60%. The specific percentage for each employee will then be set forth in the employee list at the end of the application.
- For Questions 12 and 13 (Fringe benefits and Seniority): Be sure to answer “yes” to these questions. If an employer is removing benefits, the application will be denied.
- For Question 17, the CTDOL only needs an estimate of how many layoffs are being avoided. As to the inclusion of a “Participation List”, the CTDOL asks to include “all employees you believe may need to be reduced. We do not put them on Shared Work until the employer submits their first payment request, due to a reduction of work. If they never receive a reduction then we do nothing.”
- Importantly, the CTDOL reminds employers that “the plan is flexible, reduction of work can change week to week and from unit to unit as long as it stays between the 10%-60% reduction. For the employers that apply we will honor the effective date on the plan and will enter back weeks if necessary. Once they receive their approval packets by mail they will receive all of the information needed to begin the program and to submit payment requests.”
When does the plan begin?
The plan must meet the requirements of the law and be approved in writing by the CTDOL before it can take effect. All plans must be effective on a Sunday, and the application requires employers to identify a specific start date. The CTDOL will approve it for 26 weeks, and is approving plans retroactively. In other words, if you submit the plan now and it doesn’t get approved for a few weeks, the plan can still begin at the time of your application. While the Shared Work plan is good for six months, all approved employers can apply for an extension upon expiration. All plans are only good for one year inclusive of the extension.
What happens if an employee uses their Personal, Vacation, or Sick time while on the Shared Work Program?
According to the CTDOL: “[i]n order for an employee to use vacation, personal or sick time, he or she must work at least one (1) day during a Shared Work week in order to be eligible for a Shared Work payment. During a calendar week, if an employee chooses to take five days of vacation, personal or sick time, that employee cannot use Shared Work to cover one or more of the days missed. An employee will not be eligible for Shared Work unless the one-day criterion is met.”
Will employees on the Shared Work Program be eligible for the Federal Pandemic Unemployment Compensation Benefit?
According to the CTDOL, yes. This will entitle employees on the Shared Work Program to receive an additional $600 benefit each week, no matter the percentage reduction in their hours. As a result, employees may actually be able to make more in the Shared Work Program than if they had not had their hours reduced.
Do the reductions in hours have to be the same for those in the same work unit?
No. For example, in a three person work unit, employers are not required to reduce everyone’s work by the same amount. For example, an employer can have one person in that work unit at zero work reduction, the second person in the work unit at 20% reduction, and the third in the work unit at 40% reduction.
How long is it taking for employers to get approved?
While there is normally a 30-day period, the CTDOL is striving to approve the applications as quickly as possible. We are aware of one client that had their application approved in less than two weeks. As the CTDOL continues to work through its backlog, application processing times may vary.
What can an employer do now if interested?
Employers should reach out to their counsel for more information and have their attorneys review the applications for any issues that may arise.