Bill Would Encourage Short-Time Compensation Programs in Lieu of Layoffs

Two hands holding a black briefcaseLast week, Rep. Rosa Delauro introduced the Keep Americans Working Act (H.R. 4135) in the House of Representatives. An identical bill (S. 1646) was introduced in the Senate by Sen. Jack Reed (D-RI) in August. This bill would encourage employers to implement temporary work share programs as an alternative to layoffs, and entitle those employees working reduced hours to receive proportionate unemployment benefits.

Under the terms of this bill, employer participation in short-time compensation programs would be voluntary. Those participating would need to certify that reducing employees’ hours was a measure taken in lieu of implementing temporary layoffs, and submit written work share plans for state agency approval. If unionized, the employer would also need to provide a written plan describing the short-time compensation program for union approval. In addition, two years after the bill’s enactment, employers would be required to certify that the reduced hours program would not impact the receipt of health or retirement benefits. Employees whose workweeks are reduced by at least 10 percent would be eligible for the pro rata portion of unemployment compensation they would have received if totally unemployed. Until September 30, 2011, the bill would provide states with temporary federal financing for 100 percent of the work share benefits paid to employees for up to 26 weeks.

This bill would not authorize payments to be made for work share programs implemented by employers whose workforce had been reduced by more than 20 percent in the three months leading up to the date the employer submits its short-time compensation plan for approval. Moreover, employers that hire workers on a seasonal, temporary, or intermittent basis, or those currently engaged in labor disputes would be similarly ineligible to participate. The legislation would direct the Department of Labor to establish an oversight and monitoring process for state agencies to ensure that participating employers adhere to the terms of their work share plans. Employers found in violation of their plans and/or act in bad faith by failing to retain their employees would be required to reimburse the state for the amount expended under the program.

This bill has been referred to the House Committee on Ways and Means.

Photo credit:  Alex Nikada

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.