State considers work sharing program

June 18, 2012
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Employers who experience a slump in their businesses may have an option other than to idle their work force if the state Legislature and Gov. Rick Synder decide to make Michigan the 25th state to adopt a work-sharing program.

Work-sharing programs, also known as short-time compensation, allow employers to reduce workers’ hours rather than lay them off, thereby avoiding the need to hire and train new workers when business improves.

Workers, conversely, receive prorated unemployment insurance benefits for the hours they don’t work, yet are still able to remain employed, albeit with a scaled-down salary from the companies that employ them. But that’s better than getting laid off, said Peter Ruark, senior policy analyst for the Lansing-based Michigan League for Human Services, a nonprofit, nonpartisan data-driven advocacy group for low-income Michigan residents.

“Unemployment puts children at risk, puts families at risk, because it increases the risk of things like foreclosure and disruption of children’s schools if families have to move,” said Ruark. “Anything that can minimize those kinds of disruptions we consider a good thing.”

The bill has passed the House Commerce Committee and is headed to the full Legislature, according to Chawn Greene-Farmer, public information officer for the state Unemployment Insurance Agency.

Sponsored by state Sen. Bruce Caswell, R-Hillsdale, the proposed legislation is being hailed as a win-win for employers and employees.

It stands a good chance of being ratified because of bi-bipartisan support, said Ruark.

“We consider it to be definitely beneficial for both workers and employers because it enables the workers to keep their employment instead of getting laid off by simply having their hours reduced, and they’re able to get unemployment benefits to replace those hours,” said Ruark.

Employers don’t run the risk of losing skilled workers to other employers, added Ruark. Employers could apply for more than one plan.

“We think it’s a good plan,” he said. “It does have bi-partisan support.”

Michigan’s work-sharing program in its proposed draft would be voluntary: It would not mandate businesses to choose work sharing over layoffs but would give qualifying businesses the option. It also would not create additional taxes for businesses and would have a negligible effect on the Unemployment Insurance Trust Fund because workers receiving benefits through work sharing would be receiving them otherwise if they were laid off.

The bill would allow employers to apply to the Unemployment Insurance Agency for approval of a share-work plan if they meet the following criteria:

**The employer filed all reports required under the Michigan Employment Service Agency and paid all contributions and other amounts due.

**If the employer were a contributing employer, the employer’s experience account reserve balance was positive. Companies that have more claims resulting from past workers face higher unemployment insurance rates, based on the logic that companies that are more likely to cause unemployment should pay more into the pool from which unemployment compensation is paid. Unemployment insurance is financed by a payroll tax paid by employers.

**The employer paid wages for the three years before applying for the shared-work plan.

“Employers would need to notify the state how many weeks they expect the cut in hours will last,” said Ruark. “The proposal that’s being considered now would make sure this can’t be done in a haphazard way. And there’s nothing in there that says it has to be skilled workers. That’s a term up for debate anyway. Workers in a box store, there’s a learning curve and all kinds of skills are needed to learn to be effective box store workers.”

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