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Law360 (May 4, 2020, 11:32 AM EDT) -- Employers that opt in to "workshare programs" letting workers collect partial unemployment while working a reduced schedule may not have to chip in during the COVID-19 pandemic, the U.S. Department of Labor said in new guidance.
States typically make employers cover half the costs of so-called short-time compensation benefits, which partially offset hour reductions. But states may "choose not to charge" employers for payments to partially employed workers that meet criteria for full federal reimbursement under the Coronavirus Aid, Relief and Economic Security Act, the agency's Employment and Training Administration said in guidance released Sunday.
However, states may charge for benefits that aren't reimbursable because they top an annual threshold or go to "seasonal, temporary, or intermittent" workers, and employers will have to pay in if their state adopts a temporary work-share program under the CARES Act, the agency said.
ETA head John Pallasch said Sunday the guidance "provides clarity on how states can take advantage of this program as they look to re-open their businesses."
"Short-term compensation is one of many tools that employers can use to retain connection with their employees, ease the financial impact of the crisis on their employees and to be ready to reengage quickly as business restarts," he said.
The guidance is the latest in a series of unemployment insurance program letters, or UIPLs, the DOL has sent state unemployment administrators explaining how to provide benefits during the pandemic. The new letter comes as some struggling employers look into work-sharing as an alternative to laying off workers.
Unemployment is traditionally available only to workers who have lost their jobs, but several states have adopted work-share programs that let workers collect partial benefits when their hours are cut. Twenty-five states have operational work-sharing programs, and the DOL has provided New Mexico and Kentucky help as they look to launch programs, an agency spokesperson said Tuesday.
Workers whose employers have opted in to work-sharing can collect benefits in proportion to cuts. For example, a worker whose hours are cut by 25% could collect a quarter of their maximum weekly benefit, which varies in amount from state to state but is usually at or below half their typical pay. Employers would then have to pay the state half this amount.
But states can waive the employer's share during the pandemic if benefits payments meet the criteria for full reimbursement, the DOL said Sunday. The feds will pay states back if their programs meet federal standards laid out in the Federal Unemployment Tax Act, and the payments don't exceed 26 times workers' regular benefits or go to the "seasonal, temporary or intermittent" workers the CARES Act excludes from partial benefits, the agency said. Sunday's guidance defines these terms for states whose laws don't already include definitions.
This applies to work-share programs states adopt by statute during the pandemic, but not temporary programs launched through a CARES Act provision letting states offer benefits by agreement with the secretary of labor, the DOL said. Employers taking part in temporary programs must pay in half the benefit, while the feds will reimburse the other half, it said.
More guidance on temporary programs is "forthcoming," the agency added.
The training office issued another UIPL on Monday regarding CARES Act provisions giving states grants to cover the administrative costs of their unemployment programs and flexibility to make certain temporary changes to their eligibility and employer contribution rules.
--Editing by Marygrace Murphy.
Update: This story has been updated to focus on guidance on employers' obligations to fund benefits. It has also been updated with comment from a DOL representative.
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