SEWN Advisory on benefits & limitations of the PA Shared Work Program
The Shared Work Program allows employers to temporarily reduce their workforce during seasonal or temporary downturns. The program allows the company to reduce hours by 20% to 40% per week (1-2 days per week).
For Companies, the main benefits of the Shared Work Program are:
Retains experienced employees;
Provides flexibility to maintain worker productivity;
Maintains full staff for future company growth;
Reduces future hiring and retraining costs.
For Employees, the main benefits of the Shared Work Program are:
Wages from other employers do not reduce Shared-Work benefits;
Employees will receive more benefits during weeks of reduced hours than under regular unemployment compensation (UC) requirements;
No mandatory work registration or work search requirements.
A company can plan for downturns through orderly furloughs/shutdowns. The Commonwealth (through Unemployment Compensation) will pay an employee approximately 50% of the payment on the furlough/shut-down days. The annual payroll limit is $57,000 per year.
1) Development of a Shared Work Plan
The company would need to divide the workforce into categories (e.g., shop floor production, shop floor assembly, shipping, office, management) and treat all workers within a category equally. This means that everyone in a department (a category) receives the same percentage reduction in hours. Managers (salaried employees) may be classified as a unit together that is different from hourly workers.
2) Reporting Weekly Hours to the Shared Work Program
Every two weeks, the company must report the hours worked per week for all employees in the program.
One-Day Shut Down – 20% Reduction in Hours: For weeks where the company shut down for one day, as outlined in the plan, and everyone worked 32 hours, the company would submit a report that reflects the 32 hours per week. Employees would receive approximately 50% of their wages from unemployment compensation for the days they are furloughed, in addition to their 32 hours of wages.
Regular Work Weeks: The company may increase to 40 hours per week, however, they need to inform the Shared Work Program 15 days in advance for their approval. The report for the period would reflect these changes, and employees would receive full wages from the company.
Departments with Different Hours: The program allows for the company to have different departments working different number of hours, so long as everyone is treated equally within a department (a category).
Increasing the Shut Down Days to Two per Week – 40% Wage Reduction: The company may increase the number of shutdown days to two per week (40% wage reduction). The company would need to notify the Shared Work Program 15 days in advance to gain approval. If the revenue stabilized and the company only needed to shut for a single day, the company would notify the program of that change.
3) For More Information
Website: The Shared Work Program website provides additional information on the program.
Email: For more information on the Shared Work Program, please contact them by email at: RA-LI-UC-SharedWork@pa.gov
Phone: If you have technical questions, you should leave your phone number and they will call you back. 717-787-0496
4) Change to the Company’s Unemployment Compensation (UC) Rate
The Shared Work program is a short-term solution to conserve cash and retain skilled workers. The money must eventually be repaid. This occurs by increasing the company’s UC rate.
The UC rate is based on a three-year average. Participating in the Shared Work program for one year will only result in a small increase in the rate. Participating for three years will result in a large increase.
We recommend using the program for up to one year to ensure that 2020 generates the strongest cash flow possible.
For more information on the UC rate, please contact 866-403-6163.
5) How the Shared Work Plan Fits in With Reductions in the Workforce
The steps going forward are as follows:
Prior to developing the Shared Work Plan, the company needs to decide on the permanent employee reductions its wants to make going forward:
Company needs to layoff the employees it cannot afford to keep
Company goes through the regular layoff process.
Company develops a “Shared Work Plan”; The Company needs to:
Separate employees into categories;
Develop a detailed staffing plan by category for the future;
Submit its plan to the Commonwealth for approval (takes 21 days).
Amending the Shared Work Plan
As monthly forecasts change, the company may amend the plan;
Changes can be by specific departments (categories);
A company needs to receive approval from the program, which should take up to 15 days
