WORKPLACE LAW -
Partial Unemployment Insurance Benefits

Question:

Our business is down, and I am considering laying off some of my employees. However, I would rather find some other way to reduce costs than a total layoff. I heard that employees may be entitled to partial unemployment benefits if their hours are reduced. Are there any options for me to consider?

Answer:

There are two alternatives to evaluate when considering partial lay offs or reduction in employees’ hours. First, California’s Work Sharing Program provides payment of unemployment insurance benefits to eligible individuals if their wages and hours have been reduced. Employers may consider this program as an alternative to layoffs. For example, if an employer with 50 employees decides, due to lack of work and economic factors, that it needs to lay off 10 employees, the employer could instead chose to retain all of its employees and participate in the Work Sharing program. All 50 employees would remain on the payroll, but their workweek would be reduced from five days to four days, resulting in a 20% reduction in work hours and pay. All 50 employees would continue to earn their wages for four days, and they may be eligible to collect Work Sharing benefits for the fifth (nonworking) day.

There are several clear advantages to using the Work Sharing Program, rather than laying off employees. First, no one loses his or her job. The employer can retain all of its employees, and when business improves, the employees resume their five-day work schedule. The employer achieves the cost reduction it needs, employees keep working, and all employees share the burden of the economic slowdown.

According to the Employment Development Department, any employer who has a reduction in production, services, or other conditions that cause the employer to seek an alternative to layoffs may participate in the Work Sharing program. Some of the specific requirements are:

  • A minimum of two employees, comprising at least 10 percent of the employer's regular work force or a unit of the work force, must be affected by a reduction in wages and hours worked.
  • The reduction in wages and hours worked also must be at least 10 percent.

To participate in the Work Sharing program, the employer must complete an application and submit it to the EDD. To obtain more information or participate in the Work Sharing program, visit http://www.edd.ca.gov/Unemployment/Work_Sharing_Claims.htm, or call or write: EDD Special Claims Office, P.O. Box 419076, Rancho Cordova, CA 95741-9076(916) 464-3300.

A second alternative is a claim for partial unemployment insurance benefits. Partial unemployment claims are for employees whose earnings and hours are reduced, but they are not laid off. The employer provides a Notice of Reduced Earnings to the employee, and the employee files a claim for partial benefits. An employee may be eligible for partial unemployment insurance benefits if:

  • The employee works less than their normal full time hours because of lack of work.
  • The employee experiences a reduction in wages due to the decrease in work; and
  • The employee’s gross earnings, after deducting the first $25. or 25% of the total earnings (whichever is greater) are less than the employee’s weekly unemployment insurance benefit amount.

For more information on partial unemployment insurance benefits, visit
http://www.edd.ca.gov/Unemployment/FAQ_-_Partial_Claims.htm.

These are just two options to explore when trying to avoid layoffs in your business.
- - - - - - - - - - - - - - - - - - - - - - - - - -
Back to Menu- Work Place Law 2009 Articles