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Engaging Partners & Stakeholders

SHORT-TIME COMPENSATION 101

[State logo here]

What is Short-Time Compensation?

A voluntary program that:Reduces hours for an entire group

of employees and avoids individual layoffs,Preserves jobs and trained workforce during disruptions to

regular business activity,Provides a portion of a weekly unemployment compensation

(UC) payment to employees whose hours have been reduced,Cushions the adverse effect of the reduction in business

activity, andProtects jobs for when business demand increases.

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100% Layoff Unemployment Compensation

20% Work Reduction

Short-Time Compensation

Total weekly UC benefit: $300

4 days regular pay (80% of $600) $480

+ Weekly STC payment $60_____________________________

Total weekly income: $540

(Versus $600 at 40 hours for regular, full-time work)

Pat Smith normally works 40-hours per week & earns $600 in regular pay. Under the STC program, Pat’s hours are reduced by 1 day of work per week- from 5 days to 4 days (20% reduction). How does this compare to a total layoff for Pat?

[Note: Example provided for illustration purposes. Revise the chart to reflect salary and UC payments typical for workers in your state]

Here’s How STC Compares to a Layoff

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Advantages for Employers

Keep your skilled, trained workersMaintain product/service

quality levels with your skilled workforceSkilled, trained workforce is available when business

demand increasesAvoid the time and expense of hiring/training new

employeesMaintain employee morale by avoiding layoffs and

keeping workers on-the-jobFor some employers, the UI tax rate may be lower than

if employees were totally unemployed5

Advantages for Employees

Provides continuous employment by reducing hours instead of total unemployment if laid off

Employee continues to work and earn wages and also receive a portion of unemployment benefits

Helps employees maintain skills while working the reduced hours

Allows for the continuation of health care and retirement benefits

Avoids the difficulties related to layoffs and finding another job

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What’s Involved in the Application Process?Employers submit aplan that includes:

Affected unit (or units) covered by the plan

Number of full or part-time workers in affected unit

Percentage of workers in unit covered by plan

Estimated number of layoffs averted by the STC plan

Usual weekly hours worked by eligible employees and the percentage their hours will be reduced

Plan of how employer will notify workers (including collective bargaining unit if applicable)

Plan’s expected start and end date

Other documents and verifications required by the state 7

What’s Involved in the Application Process?

Employer must also certify on the application that:

Health and retirement benefits will continue for employees

Aggregate reduction in work hours is in lieu of layoffs

Employer will furnish reports and allow records access

Employer will follow other state directives necessary to implement their plan

Employer’s participation and implementation of plan is consistent with the employer’s obligation under applicable federal and state laws

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Employer submits weekly/biweekly reports on employees in the affected unit(s), which include information on hours worked, etc.

Workers get part of their unemployment benefits based on the percentage of the reduced hours

Process After Plan Approval:

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Short-Time Compensation is a Win-Win for Everyone!

Employers Employees

STC can save employers time and money in the long-run! Maintaining a skilled force allows employers to continue providing quality products/services to its customers. When times get better, staff is in place to respond to the increase in business. Also, some employers UI tax rate may be lower than if employees were totally laid off.

STC keeps workers on-the-job. Employee are spared the difficulties with being totally unemployed and instead remain with their employer, continue to earn wages and receive a portion of unemployment benefits, and keep their skills current.

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Learn More…

Website:

Contact:

Phone:

Email:

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