THE HIRE LEARNING
Occasional Thoughts on Employment Issues From MENAKER & HERRMANN LLP

July 2009

In this tough economic climate, with businesses contemplating layoffs and employees fearing for their jobs, New York offers an alternative to layoffs through the New York State Shared Work Program (the "Program"). The Program allows employers to reduce the hours and wages of certain employees, and affected employees may supplement their income with unemployment insurance benefits. Advantages to employers include reducing overhead expense without creating costs associated with hiring down the road, avoiding severance, maintaining goodwill and retaining key employees. Employees also benefit from the Program by avoiding total unemployment and continuing to collect reduced paychecks and work benefits.

Qualification. An employer must have at least five full-time employees working 35 to 40 hours per week to qualify. Also,the employer's unemployment insurance contributions must have been paid for at least one year.

Participation. The benefits period for employers is limited to 53 weeks. The Program is designed to avoid layoffs when temporary budget problems occur due to economic conditions. The Program is not designed to assist employers suffering from more severe, long-term budgeting issues.

Application. An application, consisting of a carefully designed Shared Work plan, must be submitted to the State Department of Labor with appropriate forms within the required time frame. The Shared Work plan must reduce employee workweek hours by at least 20 percent but not more than 60 percent. In addition, the plan may not eliminate or reduce employees' fringe benefits. The plan must be implemented to reduce the workweek hours of the same number of employees the employer avoided laying off.

Operation. After the Department of Labor approves the plan the employer has submitted, covered employees must wait one week before filing for partial unemployment benefits to supplement their income. Employees are not required to look for other work but must be fully available to work for the employer. Employers are required to complete a bi-weekly continued claims form for covered employees.

Calculation. The Shared Work benefit is calculated by multiplying the employee's regular weekly unemployment benefit amount times the percentage that his or her wages and hours have been reduced. For example, employees whose wages are cut by 20 percent per week will receive 20 percent of their total weekly unemployment benefits.

Other Considerations. The reduction in hours can occur only by either a shorter workweek or a shorter workday. Employers may hire new employees to replace employees who leave while a Shared Work plan is in effect. However, they cannot hire additional employees to be covered by the plan. If there is a collective bargaining agreement, employers must get approval for the Shared Work plan from the union's bargaining agent.

This Bulletin is for informational purposes only and does not constitute legal advice. Under the rules of some states, this Bulletin may be considered advertising.