Work Sharing Unemployment Insurance Program
California’s Work Sharing Unemployment Insurance Program was the first program of its kind in the nation. The objective of the program is to help employers and employees avoid some of the burdens that accompany a layoff situation. If employees are retained during a temporary slowdown, employers can 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. This program allows for the payment of Work Sharing Unemployment Insurance benefits to individuals whose wages and hours have been reduced. The program is considered a temporary and practical alternative to layoffs.
Due to an economic downturn, an employer with 100 employees finds it necessary to lay off 20 employees. However, rather than lay off these employees, the employer participates in the Work Sha ring program. The employer keeps all 100 employees on the payroll but reduces their workweek from five days to four days, thereby achieving the same desired 20 percent reduction in payroll. All 100 employees continue to earn wages for four days and also are eligible for Work Sharing benefits for the fifth (nonworking) day. The employer retains all trained staff and, when business improves, the employees resume their five-day work schedule.
Any employer who has a reduction in production, services, or other conditions that cause the employer to seek an alternative to layoffs may participate in the Work Sharing program. To participate, an employer’s business must meet all of the following requirements:
Be a legally registered business in California.
Have an active California State Employer Account Number.
A minimum of two employees and at least 10 percent of your regular workforce, or a department of the workforce, must be affected by a reduction in hours and wages.
Hours and wages must be reduced by 10 to 60 percent.
Health and retirement benefits must stay the same as before, or they must meet the same standards as other employees who are not participating in Work Sharing.
The employees’ bargaining unit must agree to voluntarily participate and sign the application for Work Sharing.
Affected work units to be covered by the Work Sharing plan, and each participating employee, must be identified by their legal name and Social Security number.
Employees must know in advance that you plan to take part in the Work Sharing program.
Estimated amount of layoffs to be avoided by participating in the Work Sharing program.
All necessary reports and information are provided to the EDD.
The following restrictions apply:
Leased, intermittent, seasonal, or temporary service employees cannot participate.
Corporate officers or major stock holders with investment in the company cannot participate.
Work Sharing cannot be used as a transition to a layoff.
All approved Work Sharing plans are active for one year. Work Sharing plans always begin on Sunday. The earliest date to start a new Work Sharing plan is the Sunday before the first day the employer contacts the EDD. To renew the plan without a gap in coverage, the employer must submit an application no more than 10 days after the previous plan ends. Otherwise, the plan will start the Sunday before the day EDD receives the application.
Q: How Does an Employer Participate in Work Sharing?
A: To participate in this program, employers may call or write: EDD Special Claims Office PO Box 419076 Rancho Cordova, CA 95741-9076 1-916-464-3343 The Special Claims Office will mail interested employers a Work Sharing Plan Application, DE 8686 and other general information, or the employer may download the Work Sharing Plan Application, DE 8686 from the EDD website (edd.ca.gov/pdf_pub_ctr/de8686.pdf).
Q: What Happens After the Employer’s Work Sharing Plan Application is Approved?
A: The Special Claims Office in Sacramento sends the employer a letter of approval, one mail claim packet for each participating employee, and a ten-week supply of weekly certification forms for each employee. During the weeks of reduced hours and wages, the employer issues the certification forms to the participating employees. All Work Sharing claims are filed by mail. The employer and participating employee complete the documents contained in the mail claim packet.
After completion, the documents are mailed to the Special Claims Office to establish an Unemployment Insurance claim. Employees approved to participate in the program must meet regular Unemployment Insurance claim filing requirements. After the Unemployment Insurance claim is filed, the employer issues a certification form to each participating employee. Benefits are paid weekly proportionate to the percentage of reduction in hours and wages.
For example: • An employee normally works a five-day workweek and is paid $500. If this employee’s workweek is reduced to four days, the employee’s weekly wages would be $400. This is a 20 percent reduction in wages and hours. The Work Sharing benefits for this employee are 20 percent of the Unemployment Insurance benefits the employee would receive if the employee were totally unemployed. If the employee’s weekly Unemployment Insurance benefit amount is $300, the employee would qualify for $60 in Work Sharing benefits. This results in a reduction in gross wages of only $40 for that week ($400 + $60 = $460).
Q: How is the Employer Charged?
A: Employers are charged for Work Sharing Unemployment Insurance benefits in the same manner as for regular Unemployment Insurance benefits. Questions regarding employer charges may be directed to: EDD Contribution Rate Group 1-916-653-7795.
Q: What are the advantages of the Work Sharing program?
A: The Work Sharing program can meet employers’ needs due to its built-in flexibility and possible variations by:
Minimizing or eliminating the need for layoffs and the accompanying hardships for employees.
Enabling a business to retain trained employees and avoid the expense of recruiting, hiring, and training new employees.
Retaining employees during a temporary slowdown allowing employers to quickly gear-up when business conditions improve.
Treating employees more equitably than layoffs, which place the burden of economic adjustments for an entire business on relatively few employees.
Q: How does an employee qualify for Work Sharing?
A: The employee must meet the following requirements for Work Sharing:
The employee must be regularly employed by an employer whose Work Sharing Plan Application has been approved by the EDD.
The employee must be a part of the employer’s permanent regular workforce and not a leased, intermittent, temporary, or seasonal employee.
The employee must have qualifying wages in the base quarters used to establish a regular California unemployment insurance claim.
The reduction in each participating employee's hours and wages must be at least 10 percent and no more than 60 percent.
New employees must work a normal schedule for one week without a reduction in hours before they can participate in Work Sharing.
New: Furloughed and laid-off employees impacted by the COVID-19 pandemic do not have to work a normal work week to participate in Work Sharing.
Q: Can an employer with multiple locations have more than one Work Sharing plan?
A: No. There can only be one Work Sharing plan per California employer account number. However, units at the same or different locations can be included in the Work Sharing plan.
Q: Can an employer add an additional location, employee, or work unit to an existing Work Sharing plan?
A: Yes. If an employer needs to add an additional location, employees, or work units to an existing Work Sharing plan, they complete the Work Sharing Unemployment Insurance Plan Application (DE 8686) (PDF) for expanded coverage. You will need the following information:
California Employer Account Number.
Effective date of your current plan.
Effective date of requested expanded coverage.
Names of the additional units or locations.
Total number of employees in the units.
Number of additional employees who will be participating.
Employee names and Social Security numbers.
Normal and reduced work hours of employees.
Q: How is an employer charged for Work Sharing?
A: Employers are charged for Work Sharing Unemployment Insurance (UI) benefits the same way as regular UI benefits.
Q: How does an employer cancel the Work Sharing plan?
A: If the employer no longer needs a Work Sharing plan, stop giving the Work Sharing forms to the participating employees until the plan expires. Refer to the notice of Work Sharing plan approval for the expiration date of the approved plan. The employer can also request to cancel the plan by submitting a written notice to EDD Special Claims Office.
Q: How many subsequent Work Sharing plans can an employer receive?
A: Subsequent Work Sharing plans will be approved if the employer continues to meet the requirements of the program. The plan is effective for 12 months and subsequent plans may be approved until the employer's economic conditions improve.
Q: Can a holiday be used as a Work Sharing day?
A: No, unless employees in the same position worked during that holiday as part of their normal weekly hours. The holiday must have also occurred during the 12-month period before their employer began the Work Sharing program.
Q: How do employers change their holiday schedule?
A: A holiday schedule cannot be changed unless the employer provides documentation that the Work Sharing participants worked, or did not work, during the 12-month period before the employer began participating in the Work Sharing Program.
Q: Are employees who participate in Work Sharing required to serve a one week waiting period?
A: Yes, like regular UI customers, Work Sharing employees must serve a one week unpaid waiting period. The waiting period is usually the first eligible week claimed after the Work Sharing UI claim is filed.
If you have any further questions or need additional information on the Work Sharing Program, please contact me for a FREE confidential consultation at (916) 333-4653 or Stephen_Fiegel_Esq@comcast.net.
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