UI Forum (UCM)
2009 October - December * Volume 15 * Issue 3
Cost-Cutting and Labor Saving Programs
Difficult economic times call for creative ways to keep businesses afloat by retaining as many employees as possible while still cutting costs. Currently, employers are participating in a number of different programs that are designed to accomplish just that. Most of the programs involve making difficult decisions that will impact the employer as well as the employees. Here is a high level overview of some options.
Furlough
In the past, the word "furlough" referred to time off based on a company-planned schedule. For example, a company's workforce might be divided into groups where each group takes a week-long furlough without pay while the other groups work. These types of furloughs were considered voluntary since they were pre-planned and the employees were aware of the furlough at the time of hire. Some furloughs were even part of union agreements.
In today's world, a furlough is often more like a temporary layoff due to economic conditions. Historically, industries such as manufacturing, retail, and airlines have used furloughs in this manner. However, today, a growing number of other business sectors including colleges and state governments are choosing the option to furlough their employees in order to reduce operating costs. Furloughs have become a way to cut costs without having to cut jobs. Employers can address short-term cost issues without putting in jeopardy the long-term health of the company. If employers can hold on to their employees through furlough programs, they can save on the high cost of recruiting, hiring, and training new employees when business picks up.
Although furloughs can be a good way for employers to save on labor dollars, the decision to furlough should be reviewed carefully. The employer must determine if the savings in labor dollars will be greater than the cost of having their unemployment tax rate increase. An employee who has been furloughed may be eligible for unemployment benefits. Employers should also consider whether choosing to furlough their employees might result in decreased production, customer satisfaction, or revenue depending on what groups of employees are placed on furlough.
Work Sharing
Another cost-saving program on the rise is work sharing, also known as job sharing. Under work sharing, an employer may choose to avoid layoffs by reducing the number of regularly-scheduled work hours for all workers or a particular group of workers. The reduction in hours through work sharing may be significant enough to allow workers who are employed for a portion of the week to collect unemployment insurance benefits. Work sharing considers the hours of work an employee completes in a given period to determine benefits, which differs from the Partial Unemployment program that considers an employee's earnings. In a work sharing agreement, workers are not required to meet a state's regular availability for work, actively seeking work, or refusal of work requirements. Under a work sharing program, workers are required to remain available for a regularly-scheduled work week. It should be noted that not all states have work share programs and that the employer must register for those programs and keep detailed records of the participating employees.
Pay Cuts
any employers have opted for a different option-across-the-board pay cuts. When employees see that they are in the same boat as their co-workers, they can feel that everyone is sharing the same burden and may be less likely to seek other work. The employer also maintains a full staff in order to keep up with production or to keep normal business hours for client-facing positions. Depending on the size of the pay cut, an employer can protect its unemployment tax rate since the reduction in pay might not be severe enough to allow the worker to qualify for partial unemployment benefits.
When planning furloughs, work sharing, pay cuts, or other cost-cutting and labor saving programs, it is important to consider equality across departments and job groups that are affected. Doing so will reduce resentment between co-workers or the likelihood of an employee alleging unfair treatment. No matter what program an employer chooses to implement, many individuals will be negatively impacted. It is important to keep in mind that these tough decisions will help the company stay in business, and employees to remain employed.
New Hampshire
On August 17, 2009, New Hampshire Employment Security (NHES) implemented a new online system for employers to manage their unemployment insurance accounts and view information via the Internet. The agency's new system can be accessed at https://nhuis.nh.gov/employer/. Prior to implementation, all employers registered with NHES received an agency notice providing an employer registration code. This code is used to access the new system. If a notice was not received, employers may call NHES at 603-656-6651 for assistance.
ADP Unemployment Compensation Services (UCS) handles employers' unemployment claims processing, including monitoring benefit charges and tax rates. Therefore, we request that ADP UCS clients do not make any changes to their account information online. Altering account information such as mailing address or third party administrator (TPA) designation could result in a delay in receiving unemployment notices and missed agency deadlines. Please contact your UCS Client Services Representative with any questions.
Emergency/Extended Unemployment Benefits Update
During this time of high unemployment, many states have extended benefits (EB) available to claimants who have exhausted regular state benefits as well as Emergency Unemployment Compensation (EUC). Extended benefits are 100% federally funded through the end of 2009, but will return to being 50% employer funded next year. The unemployment rate has remained at the required level for three consecutive months triggering extended benefits in the following states and territories:
Alabama |
District of Columbia |
Maine |
New York |
Tennessee |
Alaska |
Florida |
Massachusetts |
North Carolina |
Texas |
Arizona |
Georgia |
Michigan |
Ohio |
Vermont |
Arkansas |
Idaho |
Minnesota |
Oregon |
Virginia |
California |
Illinois |
Missouri |
Pennsylvania |
Washington |
Colorado |
Indiana |
Nevada |
Puerto Rico |
West Virginia |
Connecticut |
Kansas |
New Hampshire |
Rhode Island |
Wisconsin |
Delaware |
Kentucky |
New Jersey |
South Carolina |
|
As of the date of this publication, legislation has been introduced to extend EUC for a third time; thus providing an additional 13 weeks in states with a 9% or higher unemployment rate. If passed, a claimant could potentially receive up to 92 weeks of unemployment benefits. The following is a breakdown of those benefits:
- 26 weeks of regular state benefits
- 20 weeks of extended benefits (EB)
- 46 weeks of emergency unemployment compensation (EUC):
--20 weeks in all states
--13 weeks in states with 6% unemployment or higher
--Proposed 13 weeks in states with 9% unemployment or higher
Case Study
Improper Workplace Behavior
Sometimes we are faced with people who behave improperly. In our personal lives this can be upsetting; however, this type of behavior can be harmful to your business if it happens in the workplace.
The Claim
The claimant had been employed for five years in several positions for the employer, most recently as a warehouse supervisor. The employer received complaints of the claimant's inappropriate behavior and immediately launched an investigation. The claimant was discharged due to violation of the employer's harassment policy. The employer did not disclose any facts of the harassing behavior due to concerns about employee confidentiality. The claim determination found the claimant to be eligible to receive unemployment benefits. ADP filed an appeal on behalf of the employer.
The Hearing
ADP represented the employer at the hearing and testimony was taken from six employees, each alleging harassing behavior by the claimant. The behavior involved verbal statements, written statements in the form of hand-written notes, and cartoons that had been clipped from magazines and newspapers. The ADP representative entered 19 pages of documents into the record as exhibits, which included the employer policy and annual training records showing the claimant was aware of the policies. The witnesses, who were both male and female, testified that the claimant had made numerous statements of a crude nature that were personally offensive. They said they had seen notes written by the claimant in the margins of shipping orders that were sent to accounting for processing. The notes contained profanity and derogatory terms relating to a specific customer. The behavior had been going on for nearly a year before it was reported. When questioned why they had not come forward sooner, the witnesses said they tried to avoid the claimant, and because he worked in the warehouse, they had a lower expectation of him. A decision was made in favor of the claimant. It was found that the actions of the claimant were considered as "shop talk" and that his job working in the warehouse was reasonably separated from the professional positions of the business. NOTE: The reference to "shop talk" was based upon numerous precedent cases examining acceptable behavior based upon the location where work is performed.
The Appeal
ADP appealed the hearing decision. The written appeal argument focused on the premise that, while the claimant was a blue-collar worker, the employer did not condone this behavior. The fact that the employer trained the claimant about its policies on an annual basis was at the root of the argument. Testimony in the hearing supported that the employer took swift action upon learning of the behavior, despite the fact that those offended did not act as quickly. Lastly, it was shown that the claimant was engaged in the behavior affecting employees who did not work in the warehouse and, therefore, the issue of "shop talk" did not apply.
The Decision
The Appeal Board overturned the hearing decision. The Board found that the claimant was not covered under the legal supposition of "shop talk" and supported the argument that his actions did indeed impact others outside of the realm of the warehouse. The Board further stated that the employer, who acted in an expeditious manner, should not be penalized for the action of the employees who did not act quickly in reporting the behavior.
The Final Word
Far too many employers do not have formal policies regarding workplace behavior. Companies are being sued by employees due to harassing action of co-workers. The employer in this case avoided liability by training its employees regarding the expectation of behavior and by documenting that training.
The UI Forum is distributed with the understanding that the publisher is not engaged in rendering legal or accounting services. If legal, accounting, or other professional assistance is required, the service of an attorney or certi?ed public accountant should be sought. This newsletter is published quarterly by Unemployment Compensation Management, a department of Unemployment Compensation Services. © 2009 Automatic Data Processing, Inc.