Shared-Work Program Provides an Alternative to Employee Layoffs

Pennsylvania’s Shared-Work program is a tool that that allows an employer to temporarily reduce the work hours of a group of employees while supplementing their lost wages with partial unemployment benefits rather than laying off any employees. Employees covered by the Shared-Work plan receive a percentage of their unemployment compensation (UC) weekly benefit amount while they work the reduced schedule, if they are otherwise eligible for UC.

Shared-Work plans empower employers to retain a trained and qualified workforce during periods of slowdown, and quickly ramp up operations without the expense of recruiting, hiring, and training new employees.

Since January 2020, more than 900 shared-work plans have been successfully put into action from employers across the commonwealth. With changing dynamics in the modern-day work place, Pennsylvania’s Shared-Work program may help businesses.  

Who is included in the Shared-Work plan?

Employers select which employees will be included in the Shared-Work plan. A plan must apply to one “affected unit” which is defined as a department, shift, or other organizational unit. Employers may have more than one plan if there is more than one affected unit. For example, all employees working the night shift may be one unit. All employees in the affected unit must participate; however, an employee who has been employed in the affected unit for less than three months, or an employee who would work 40 or more hours a week under the plan may not participate. There must be at least two participating employees, determined without regard to corporate officers.

How much will the employees’ hours be reduced under the Shared-Work program?

After identifying the affected unit(s), the employer selects the percentage by which the employees’ hours are reduced, referred to as the “reduction percentage.” The employer determines the reduction percentage based on business needs, but it must be at least 20 percent and cannot exceed 40 percent of the employees’ normal weekly hours. The reduction percentage must be the same for all employees participating in the Shared-Work plan. For example, if an employee normally works 40 hours per week, and the reduction percentage is 20 percent, then the employee’s hours are reduced by 20 percent and he or she would work 80 percent of 40 hours, or 32 hours per week. If an employee in the same unit works 30 hours per week, then he or she would work 80 percent of 30 hours, or 24 hours per week.

How are UC benefits determined under the plan?

For each week in the plan, an employee receives a percentage of his or her UC weekly benefit amount (WBA) equal to the reduction percentage. For example, if the employee’s WBA is $400 and the employee’s hours are reduced by 20 percent under the plan, the employee would receive 20 percent of $400 (or $80) in Shared-Work UC benefits.

What qualifications are required for participation?

To participate in Pennsylvania’s Shared-Work program, the employer must have filed all UC tax reports and paid all amounts due under PA UC Law, have a positive reserve account balance (for contributory employers) and have paid wages for the last 12 consecutive quarters, according to the department’s Office of UC Tax Services.

For more information and to view FAQs, forms and the brochure, visit www.uc.pa.gov/sharedwork .