HR Perspectives and Considerations Surrounding The Coronavirus

June 16, 2020

How the Shared-Work Program Supports the Economy During COVID-19

Layoffs in the context of COVID-19 are a cost reduction maneuver that actually generates future expenses for the employer. Once demand returns, firms will have to expend resources on hiring and training to ramp back up to full capacity.

With the COVID-19 outbreak wreaking havoc on the economy, layoffs are inevitable as businesses seek to navigate a major financial crisis. But with shared-work or work-sharing programs, there may be another way to withstand the storm.

According to the Department of Labor and Industrial Relations, the shared-work program “is an alternative to layoffs for employers faced with a reduction in available work. It allows an employer to divide the available work among a specified group of affected employees instead of a layoff.” It is specifically geared toward employers who are committed to keeping employees, as opposed to going down the layoff path. Work sharing gives employers a way to respond to a drop in demand by reducing the hours rather than laying workers off.

Shared-Work Program in the United States

While the CARES Act urges states and employers to adopt this program, there are a total of only 25,873 employers who currently participate. The federal government will reimburse 100% of the expenses of short-time compensation benefits paid in states that have work-sharing programs in place. However, a 50% federal coverage rate will be given to those states that initially do not have a work-sharing program. Finally, the CARES Act grants funding for states to promote and develop the implementation and administration of work-sharing programs going forward.

Importance of Adopting the Shared-Work Program in the Midst of a Pandemic

The shared-work program can be especially helpful when the decline in demand is expected to be temporary, as many predict to be the case for this pandemic-induced recession.

The value of maintaining relationships between employers and employees is two-fold. First, it can avoid huge spikes in permanent job losses that are financially disastrous for many families. Workers sustain their employment, albeit with reduced hours, and avoid many of the damaging effects of losing a job. Second, both employers and workers will avoid costly search, hiring, and training requirements once demand eventually picks back up.

The shared-work program is geared toward employers who are committed to keeping their people employed. Through the help of this program, you just might have more options than you thought.