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More DOL Guidance on CARES Act Unemployment Expansion - Workshare Programs

posted May 6, 2020, 1:35 PM by Allison Ayer   [ updated May 6, 2020, 1:43 PM ]

Hoping to provide some financial relief to millions of U.S. workers, Congress passed the CARES Act back in March.  Among other tings, the Act provides expanded Federal unemployment benefits to workers who lost jobs because of coronavirus and were eligible for state unemployment benefits.  But this expanded unemployment has had the unintended consequence of creating a disincentive for some employees to return to their jobs because they collect more in unemployment than they would if they were working.  This creates real challenges for businesses trying to reopen. 

For its part, the DOL continues to issue new guidance concerning unemployment assistance during the pandemic.  The guidance seems to be trying to address some of the challenges inadvertently resulting from expanded Federal unemployment.   

For example, we noted in an earlier Legal Line post that the DOL published guidance that furloughed or laid off employees would not be allowed to continue receiving unemployment benefits if they refuse a job offer or refuse to return to work after the lifting of the stay home orders.  Moreover, employees will not be entitled to unemployment if they refuse to come to work out of a mere “general concern” about contracting the COVID-19, according to that guidance.

In new guidance issued May 3, the DOL provided an overview of state work-sharingprograms under the CARES Act and federal reimbursement available thereunder.  Typically, an employee has to have lost his/her job for a reason attributable to the employer in order to receive unemployment benefits.  But state work-share programs allow employees to continue to work reduced hours while still collecting partial unemployment benefits.  In essence, the work sharing programs discourage layoffs because employers, under a state-approved plan, can the reduce hours for a group of workers while at the same turn these workers can receive a reduced unemployment benefit payment.  New Hampshire, Massachusetts and many other states have worksharing programs.   

The benefits available for state worksharing programs vary according to state rules, but generally the employee receives partial benefits proportionate to the reduction in hours.  For example, if a worker’s hours are cut by 1/3, he/she may continue to work and collect up to 1/3 of the maximum weekly benefit available. 

Under most state unemployment rules, employers pay the state for a portion of the partial benefits.  But under the DOL’s new guidance, if benefit payments meet the criteria for full reimbursement, states are permitted to waive the employer’s share of partial benefits during the COVID-19 pandemic for employers who voluntarily participate in state worksharing programs.  According to the guidance, the Federal government will pay states back if the programs meet federal standards in many circumstances.  These rules apply to statutory worksharing programs states, not temporary programs allowed to be implemented through the CARES Act by agreement with the Secretary of Labor.  

The DOL’s position seeks to encourage businesses and employees alike to find a mutually beneficial way to get individuals back to work even where new safety guidelines, social distancing measures, and a decline in business prevent operating at full time staffing levels for all employees.  The DOL notes that the worksharing program “benefit payment cushions the adverse effect of the reduction in business activity on workers and, by maintaining their connection to their employers, ensures that these workers will be available to resume prior employment when business demand increases.”  As states increasingly permit businesses to reopen, employers should consider whether these relaxed contribution rules make it worth their while to participate in worksharing programs.  

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