Work Sharing Plans for Cut-back Operations

The newly streamlined Employment Development Department (EDD) Unemployment Insurance “work sharing” procedure enables employers to reduce costs in these tough pandemic times, without letting employees go.

Work share plans are not new in California, if used infrequently. Instead of the tough choice of who is to stay and who is to go, an employer facing a downturn may reduce co-worker hours across the boards or in an affected unit with each individual receiving unemployment benefits toward his/her missing work time.  Such plans thus keep all those employees on payroll, preserving any applicable health and retirement benefits.

Spurred by COVID conditions, Assembly Bill (AB) 1731, effective September 30, 2020, aims to expedite this potential solution.

EDD now provides an electronic portal to enable employers to propose work sharing plans to cover “affected units” of their companies, i.e., those “plants, departments, shifts or other identifiable units,” having a minimum of two workers, and not less than 10 percent of the employer’s regular permanent work force involved . . . in each week, or in at least one week of a two-consecutive-week period, to which an approved work sharing plan applies.”

Among other requirements, the employer must also:

• Only reduce hours between ten and 60 percent;
• Notify employees in advance or explain to the EDD why it is not giving notice; and
• Certify that the plan “is in lieu of temporary or permanent layoffs, or both,” as well as how many workers the employer would have had to lay off without the plan.

The EDD must act on a plan application within ten working days of receipt and provide employers a claim packet – via online or by mail — within five days of approval.

Plans approved through September 1, 2023 will be in effect for one year from approval date unless the employer requests a shorter time period.

The EDD’s online FAQs for employees and employers supply other application and administrative requirements.

See also,

• Unemployment Goes Viral, Furlough Versus Layoff: A Distinction Without a Difference? (March 2020)
• Workplace Safety Nets, The Coronavirus Outbreak and California Unemployment Benefits (March 2020)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

November 24, 2020