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Help Available in Eighteen States, Ease the Pain of Layoffs

03/05/07

HR managers in eighteen states can take advantage of a valuable program some state labor departments seem to hide under a bushel basket. Called Short-Term Compensation (STC) Plans by the U.S. Department of Labor, they allow employers a potent alternative to a layoff: You reduce the hours employees work, and they can collect partial unemployment benefits for the hours they’ve lost.

For example, say you need to cut payroll by 40 percent. Under an STC program, you’d put those affected on a three-day workweek. The employees would then receive 40 percent of the unemployment benefits they’d receive if they lost their jobs completely.

A Rose by Any Other Name…STC plans go by different names in each state that offers one, but most play off the words “work” and “share.” In California, it’s the Work Sharing Unemployment Insurance Program. In Massachusetts, it’s simply the Worksharing Program. In Connecticut, it’s the Shared Work Program.

Whatever the name, the benefits can be significant, both for employer and employee:

  • Employers keep skilled workers on staff.
  • Employers don’t lose their investment in training.
  • Employers stay prepared for a post-recession uptick in business and avoid the expenses involved in recruiting, hiring, and training.
  • Employers maintain the productivity of employees, who are less concerned they’ll lose their jobs.
  • Employers can use an STC plan before a full-scale layoff, allowing employees transition time to find new work.
  • Employers protect affirmative action gains they’ve made.
  • Employees maintain job security and income, and they avoid the pain associated with layoffs and change.
  • Employees in some cases retain full pension/health benefits.

    States with STC Programs
    States with STC programs in place include Arizona, Arkansas, California, Connecticut, Florida, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, New York, Oregon, Rhode Island, Texas, Vermont, and Washington.

    Rules and regulations vary by state. In Washington State, for example, seasonal or part-time employees can’t participate. In Connecticut, you can’t reduce fringe benefits. In Massachusetts, the reduction in hours can’t exceed 60 percent; in Connecticut, that figure is 40 percent.

    As noted, it’s not easy to find information about STC programs over the Internet. Your best bet: head to www.doleta.gov/programs/uimap.asp Click on your state in the map, and you’ll be transferred to your local government’s unemployment insurance Web site. If it contains no information about the STC program, you can at least get a phone number to make further inquiries.

    If your state has an STC program, consider taking advantage of it before giving your employees the boot. You’ll save payroll and other employee-related costs, you’ll save jobs, and you’ll go a long way toward creating a productive, loyal, dedicated workforce that can help see your company through both good times and bad.

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