Jay G. Putnam, Attorney at Law

Lawsuit Prevention for Employers

March 20, 2020

CORONALERT #1

TOO GOOD TO BE TRUE: The California Employment Development Department ("EDD") Work Sharing Unemployment Insurance Program.

 

With the COVID-19 crisis confronting virtually every California employer to one degree or another, a major concern involves the plight of employees who are suddenly without work for the foreseeable (or unforeseeable) future.

 

One alternative means of easing the pain for employees is EDD's Work Sharing Unemployment Insurance Program, which EDD describes as a "practical alternative to layoffs."  To illustrate, an employer might consider, as an alternative to laying off 50 percent of the workforce, reducing payroll by 50 percent, and enlisting Unemployment Insurance to pay part of the difference in the form of wages to employees. 

 

Predictably, there are eligibility requirements.

 

Participation requires that employers experience a reduction in production, services or similar conditions, and that:

 

1. At least two employees, and a minimum of 10 percent of the workforce, or an identifiable work unit, experience a reduction in wages and hours worked;
2. A minimum 10 percent (and maximum 60 percent) reduction in weekly wages and hours worked;
3. The employer maintain the same employee health and retirement benefits that existed before the wage/hour reduction and the same wages for non-participating employees;
4. Corporate officers and major stock holders may not participate. 

 

Employees seeking to participate in  work sharing must be regular workers, as opposed to leased, temporary or seasonal employees.  They must have wages used to establish a regular unemployment insurance claim, calculated by the Standard Base Period and the Alternative Base Period.  Employees earning $1,300 in one quarter, or $900 in one quarter and whose base period earnings are one and one-quarter times the highest quarter's earnings, would likely qualify. Lastly, participating employees must have completed a normal work week, i.e., without hour or wage reductions, before starting work sharing. 

 

All in all, this seems like an option that will be attractive to many employers. 

 

For more information: www.edd.ca.gov/pdf_pub_ctr/de8714ab.pdf

and www.edd.ca.gov/pdf_pub_ctr/de8686.pdf