Could Short-Time Unemployment Compensation Help You Preserve Your Workforce?

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Article co-authored Tom Crowley, ADP Director of Government Affairs.

Many employers are facing significant business slowdowns due to the COVID-19 health crisis. There is a helpful program available in most states that is designed to help employers maintain their work forces, in the form of "Short-Time Compensation" (STC) or shared-work programs. STC preserves employees' jobs and employers' trained workforces by allowing employers to reduce scheduled hours rather than laying off workers, with affected employees receiving government funded supplemental pay for the reduced hours. Employees appreciate the opportunity to maintain their current job and stable income, and employers can quickly resume business activities as demand improves.

More than half of the United States (26 states) have operational STC programs, and other states are seeking approvals for their programs now.

The recent Coronavirus Aid, Relief, and Economic Security (CARES) Act boosted work-sharing programs by authorizing federal funding of STC benefits and giving states new funding to implement the programs. In states that already have STC programs, the federal government will pay 100% of such benefits through December 31, 2020. In states that adopt such programs after March 27th, half of STC benefits will be paid by the federal government.

Employers Must Apply

Employers must apply to the state in which their business resides for permission to participate in an STC program. Once the state approves an employer's STC plan, workers' hours may be reduced and partial unemployment benefits take effect. The amount payable is a proportionate percentage of unemployment benefits that an employee would receive if they were totally unemployed.

For example, if an employee normally works a 40 hours per week, and under an approved plan, the employee's hours are reduced by eight hours (20 percent). Under the STC plan, the employee would receive $54 in weekly benefits (assuming a weekly unemployment benefit amount of $270; i.e., 20% of $270 = $54), in addition to the 32 hours of regular earnings from the employer.

Thus, rather than laying off 20% of staff, an employer could reduce hours by 20%, thereby helping all employees maintain their connection to the workplace and stable income. This also makes it much easier for employers to increase hours to previous levels as economic conditions improve.

For more information, see this fact sheet:

U.S. Department of Labor resource:

State STC Websites for more information:

During challenging economic times, this work sharing arrangement can be beneficial to employers and employees in states where programs exist. If your state isn't listed above, check with state authorities to see if a program is being developed.

Related articles:

Best Practices for Unemployment Claims Management in Response to COVID-19

COVID-19 Workplace Impact and Employer FAQs: Unemployment Insurance

Other resources:

Launch this special edition webcast: Understand and Prepare to Manage Unemployment Compensation Changes in Response to COVID-19

Get customizable email templates and in-depth information on direct deposit, recent legislation and other valuable topics in the COVID-19 Employee Communications Toolkit.

Find FAQs, checklists, webcasts, and the resources to help you protect and manage your workforce here: ADP Employer Preparedness Toolkit — Coronavirus Disease (COVID-19)