DOL expands program to avoid layoffs
To comply with recent federal law, the state”™s Department of Labor is expanding a program that helps employers avoid layoffs during tough economic times.
In addition to private employers with more than four employees, nonprofits and government agencies will now be able to enroll in the state”™s Shared Work Program, as of Oct. 1.
Enacted in 1990s, the Shared Work program gives employers the chance to reduce the work schedule of full-time employees during what the employer believes will be a temporary hardship. In turn, the company”™s employees will receive partial unemployment benefits to supplement lost wages.
“Among the general business community it has been a very well-received program,” said Mark Soycher, human resource counsel at the Connecticut Business & Industry Association (CBIA). “To the extent that they can use it as an alternative to getting rid of people, it”™s a great opportunity to manage the ups and downs of the economy. It”™s really permitted companies to have their workers access unemployment benefits more readily.”
Reflecting the Middle Class Tax Relief and Job Creation Act of 2012, the program”™s expansion will help the state conform with the national shared work program. It stands to receive a $1.3 million grant to help develop, upgrade and promote the program, as well. If it hadn”™t expanded, it would have likely lost federal unemployment insurance money, which funds about half of the labor department”™s operations.
Previously the Labor Department”™s law excluded nonprofits and government agencies that don”™t pay taxes into the Unemployment Trust Fund. But under the new national standard, those that pay dollar-for-dollar for unemployment benefits, like nonprofits, will also be able to participate, though, the program isn”™t as financially attractive as it is for private employers.
Historically, use of the program was relatively low in the 17 states that had it until the recession hit, said George Wentworth, a senior staff attorney with the National Employment Law Project. Then, tens of thousands of employers were suddenly enrolled, spurring Congress to encourage more states to create programs, Wentworth said.
“There was an explosion of interest as employers were looking to keep employees on the payroll,” he said. National use increased 10-fold between 2007 and 2009. The program is estimated to have saved 450,000 jobs during the recession and into 2012.
Today, about 275 companies are enrolled in the program in Connecticut, according to the Labor Department. However, officials are unsure how many more companies might enroll once the department follows through with promotional plans.
As nonprofits and government agencies experience the same impacts of a rough economy, CBIA”™s Soycher said he believed the expansion would be a good thing for the business community.
Studies have shown similar programs in countries like Germany, where there is a high usage of shared work programs, have helped keep unemployment rates low during recessionary periods.
“There”™s no reason why nonprofits shouldn”™t be able to take advantage of the flexibility this provides in managing their workforce,” Soycher said. “That is a good thing.”