| Sharing Work to Avoid Layoffs |
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| Tuesday, 28 April 2009 17:39 |
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The NYS Department of Labor’s Shared Work program is designed for employers facing a temporary decline in business. Rather than laying off a percentage of the work force to cut costs, an employer can reduce the hours and wages of all or a particular group of employees. The employees whose hours and wages are reduced can then receive partial unemployment insurance benefits to supplement their lost wages. Here is a DOL example of how the program works. An employee earning $400 per week might receive an unemployment benefit rate of $200, if totally unemployed. Under the Shared Work Program, if his wages and hours are reduced 20%, he would receive $320 per week in wages from his employer (20% of $400 equals an $80 reduction), and $40 in Shared Work Benefits (20% of $200). In other words, the employee would receive a total of $360.00 in wages and Shared Work benefits for each week of the plan. In turn, the employer commits to maintaining staff fringe benefits at their full level. Despite the reduced compensation, there are clear benefits to employees who, at least hopefully, will avoid the complete loss of their employment. Similarly, there is no loss of health insurance coverage or other benefits. For employers, Shared Work allows the retention of trained and experienced staff through temporary downturns, thus avoiding declines in program quality and significant recruitment and training costs when things turn around. “The Shared Work program is truly a win-win for employers and employees,” said DOL Commissioner M. Patricia Smith at a recent event promoting the program. “Unfortunately, the program has been highly underutilized in New York City and we want to change that.” Shared Work seems like a good fit for a variety of circumstances frequently faced by nonprofit human service providers. It is not uncommon to see temporary interruptions in funding from state or city contracts. Fiscal year crossovers on programs funded through City Council initiatives or other member item grants, for example, typically create temporary gaps in financial support despite the high probability that funds will be available again at some point within the next several months. Similarly, percentage reductions in funding or loss of whole programs due to budget cuts can create situations appropriate for use of Shared Work. In some cases, executive directors may wish to utilize the program while they pursue alternative funding opportunities. Take, for example, the Homelessness Prevention Program (HPP), which was targeted for elimination on April 1st by Governor Paterson’s Executive Budget. As the deadline approached, executives at each of the affected agencies began scrambling for ways to keep their programs running, even at reduced levels, while looking for new funding streams. (In this case, alternative financing seemed likely due to the obvious cost effectiveness of the program and the significant amounts of money for homelessness prevention activities included in the federal stimulus program. Thankfully, funding for the programs was restored through budget negotiations only days before the programs were scheduled to close.) In other cases, the loss of one contract may only partially impact programs – such as youth development or afterschool programs -- which are supported through a patchwork of separate funding streams. Elimination of one contract, for example, might mean a 25% cut for the program as a whole. Shared Work would allow the program to scale back on staffing without layoffs while alternative funding is identified or normal attrition brings agency-wide staffing back in line with funding levels. Vera Institute of Justice began utilizing Shared Work earlier this year after the sudden loss of grants from the JEHT Foundations which had been impacted by the Bernie Madoff ponzi scheme. “We were contemplating whether we needed to do layoffs,” says COO Ernest Duncan. “We just felt it wasn’t the right thing to do at this time. Instead, we looked at a series of steps including some nonpaid time. Then, we heard about this program. This allows them to collect unemployment to help fill in the gap for the days they aren’t working. We absorb part of the cost but it allows us to keep them on in the hopes that things will pick back up.” Approximately 40 of Vera’s administrative staff – including Duncan -- began working on 40% reduced schedules. However, only a handful of the affected Vera employees have opted to take part in the Shared Work program. Since benefits collected under the Shared Work program would ultimately reduce an employee’s Unemployment Insurance benefits in the event of a complete layoff, many staff have opted to keep their eligibility for full benefits going forward. And, it is important to remember that Shared Work was designed to be a temporary tool that bridges employers and staff across difficult times. You need to have an exit strategy, preferably a clear and likely source of alternative funding. “Right now, a number of major foundations are looking at the programs impacted by the closure of the JEHT Foundation,” says Duncan. “We are hoping that we will get some funding and come back to 100 percent.” As with any government program, Shared Work comes with a host of eligibility requirements and implementation rules. Here are a few highlights: Any New York employer who has five or more full-time employees and who has been liable for unemployment insurance purposes for at least four completed calendar quarters may apply to participate in the Shared Work Program. The employer’s plan must meet the following basic requirements: • The employees’ hours and wages must be reduced at least 20% but not more than 60%. • Only full-time employees who normally work between 35 and 40 hours per week are eligible to participate. • The employees’ fringe benefits cannot be reduced or eliminated. • The plan cannot exceed 53 weeks. • The employer cannot hire additional full-time or part-time employees for the work group covered by the plan. • If the employees are covered by a collective bargaining agreement, the collective bargaining agent must approve the Shared Work plan. • The plan must be in lieu of a layoff of an equivalent percentage of employees. Employees who would normally be eligible to receive regular unemployment insurance benefits are eligible to participate in the Shared Work Program. For more information about the Shared Work program visit the Department of Labor website at www.labor.state.ny.us or call (518) 457-5807. Fred Scaglione is the editor of NYNP. Add this page to your favorite Social Bookmarking websites           |
We hear a lot these days about sharing the pain and sharing the sacrifice. Now, however, there is a little known government program that provides actual financial incentives for employers and employees to band together to avoid staff layoffs. Several aspects of the program appear to make it particularly appropriate to the needs and spirit of nonprofit human service agencies.
COMMENTS
I mentioned the concept at the meeting at SEIU on Thursday eve, but it did not meet with favor. I probably did not present it properly as I may have forgotten it was a NYS program