On December 27, 2020, President Trump signed the Consolidated Appropriations Act, 2021 (“COVID-19 Stimulus Act”), authorizing assistance...Read More
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Michigan’s Work Share Program allows employers to temporarily reduce full-time employees’ hours as an alternative to layoffs and furloughs. The primary goal of the work share program is to reduce unemployment during times of economic downturn.
Employers can benefit because a plan allows them to:
- Operate at reduced capacity and save money in wages during difficult times
- Retain trained, hard-working employees and callback employees previously laid off
- Avoid expenses from employee turnover and recruiting, training, and hiring new employees
- Maintain employee morale
- To some extent, protect employees from the financial hardships of layoffs and furloughs during economic downturns
Requirements and COVID-19 Changes
Work share plans involve several key elements, and now they offer additional benefits provided through the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act and changes initiated through Governor Whitmer’s Executive Orders. Designing a work share plan requires the following components and offers some new (even if temporary) flexibility.
- A work share plan is submitted to and reviewed for approval by the Unemployment Insurance Agency (“UIA”).
- The work share plan is specific to an affected unit. The employer defines the affected unit: it could be a department, shift, or other unit of 2 or more employees to be affected by the reduced hours. An affected unit can be approved for a work share plan with a mix of employees in and out of a collective bargaining unit.
- Employers can pursue a work share plan affecting organized (union) employees, provided they seek and obtain agreement from the collective bargaining representative(s). Once a proposed plan is negotiated between the employer and union and approved by the UIA, the union cannot make unilateral changes to or terminate a work share program plan.
- Work hours for the affected unit must be reduced by 10%-60%. This reduction is applicable to hours, not salary or wage rates: this means reducing pay alone will not qualify for a work share plan.
- If an employer has already laid off employees, the laid off employees can be brought back to work under a work share plan.
- To be eligible to receive partial unemployment benefits through the program, employees must have earned enough wages to qualify for a regular unemployment claim. Part time employees are now eligible. Seasonal, intermittent, and temporary employees are not eligible.
- Under the CARES Act, an employee who qualifies for unemployment benefits will receive an additional $600 per a week (for up to 4 months) through July 31, 2020, as part of the Federal Pandemic Unemployment Compensation provisions. Additionally, work share benefits paid between the weeks ending in April 4, 2020 and December 26, 2020 are entirely federally funded.
- Under the Governor’s Executive Orders, even a negative unemployment reserve balance or outstanding unemployment tax owed can participate, but there is a minimum length of historical business operation requirement.
Maintaining a Work Share Plan
Once the proposed work share plan is approved, an employer must be sure to follow these rules:
- Do not lay off any employees in an affected unit.
- Continue to provide fringe benefits.
- Maintain the same percent reduction in hours for all employees in the affected unit.
- Certify affected employees’ hours and pay weekly or bi-weekly. We recommend using the Michigan Web Account Manager (MiWAM) account.
- Inform employees who will be affected by the plan: what is changing for them (hours, pay, days of work), and what is not.
- When an employer is ready to terminate the plan, it should provide the UIA with written notice and explanation of the reason for change. The UIA may terminate the plan with good cause.
Frequently Asked Questions
Q: If we already laid-off our employees, am I required to recall those employees before I can pursue a work share plan?
A: Neither the statute nor Agency guidance require previously laid off employees to be recalled before an employer can get a work share plan approved. The only layoff related component is the prohibition against layoffs while the work share plan is in place.
But remember that an entire affected unit must participate in the work share plan. An “affected unit” is defined to include “a department, shift, or other organizational unit of 2 or more employees that is designated by an employer to participate in a shared-work plan.” When defining the “affected unit,” specifically identify it as current employees.
Q: Can employees work overtime if needed while a work share plan is in place?
A: It depends on how many hours the employee worked before the plan was implemented. Work share plans are for employees with reduced hours, and all employees in an affected unit must participate. If an employee in the affected unit will work 40 or more hours a week even after the reduction percentage is applied, that employee is not considered a participating employee. For example, consider a plan that reduces the affected unit’s hours by 10%. If an employee in that affected unit normally works 50 hours per week, that employee would work 40 hours a week when hours are reduced. Because that employee would still work 40 hours a week, that employee would not be participating in the work share plan and would be eligible for overtime. Under the same plan, an employee in the affected unit who normally works 40 hours a week could not work more than 36 hours per week. Once the plan starts, that employee cannot work any overtime under the work share plan.
Q: What is “underemployment” and how is it different than work share?
A: Employees may receive underemployment benefits even when they experience reduced hours and earnings. (The reason for the reduction cannot be the employee’s request.) Their earnings when working reduced hours are used as a partial “set-off” to any unemployment benefits the employee is eligible to receive. “Earnings” can include more than just wages: it can also include living expenses such as room and board, vacation or holiday pay, or a payment of separation in lieu of layoff.
Similarly, work share plans “set-off” the employee’s wages earned from reduced hours against any unemployment benefits the employee is eligible to receive. However, the employer must work with the UIA to create a plan to benefit an affected unit.
Q: Can we modify an employee’s duties while participating in a work share plan?
A: Yes, if the work is suitable work that is comparable overall to the work the employee did before. For example, an employee who works in a car manufacturing plant as an assembler can have his job modified to also work as a press operator when both jobs pay similarly, work the same shift, and allow the employee to maintain seniority and fringe benefits. However, a carpenter who used to receive fixed wages cannot have his position modified so that he must work on commission and assume the risk of losses.
Contact us if you have any additional questions about how a work share program can help your workforce!
- Apply here if you’re interested in implementing a work share plan for your business or organization.
- Watch this video for step-by-step instructions on signing up for work share.
- Check out this helpful brochure.
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