An Alternative to Layoffs- California's Partial Unemployment Program
Posted by Shannon Going and Mark S. Spring
With the difficult economic climate of today’s markets cutting into profit margins across almost all sectors, employers may be considering layoffs as a way to minimize financial hardship. California employers, however, should be aware that there is an alternative to layoffs through California’s Work Sharing, or “partial unemployment” Program. The goal of the Work Sharing program is to ease the difficulties of a layoff situation for both the employer and the employee – while the employee avoids a period of total unemployment, the employer can avoid the costs of hiring and retraining new employees when business conditions improve. The program gives the employer the option to, instead of discharging an employee, allow the employee to work a reduced schedule and collect the percentage of their weekly unemployment insurance benefit amount equal to the percentage reduction in wages for that week.
To be eligible, the employer must show that a minimum of 10% of the regular permanent workforce requires a reduction in wages and hours worked, and that at least 2 employees, but not less than 10% of the regular permanent workforce, participate in the program. Employers with employees subject to a collective bargaining agreement must also obtain the written approval of the bargaining agent. To apply, employers must submit their plan for approval to the California Employment Development Department (“EDD”) using form DE 8686 (http://www.edd.ca.gov/pdf_pub_ctr/de8686.pdf). Each Work Sharing Plan is effective for six months, but the employer may be approved for subsequent plans so long as it continues to meet the criteria for participation.
Eligible employees must (a) be regularly employed by the employer applying for the program, (b) show qualifying wages in base quarters used to establish regular California unemployment insurance claims, (c) show a reduction in hours and wages of at least ten percent, (d) have completed a normal work week (with no hour or wage reductions) prior to participating in the employer’s program, and (e) not be a leased or temporary employee.
Interested employers can find more detailed information on the EDD Website at www.edd.ca.gov.