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.
The unprecedented economic conditions brought about by the COVID-19 pandemic have forced many Wisconsin employers to implement layoffs, partial furloughs, pay reductions and other painful employment actions. With uncertainty surrounding the eventual reopening of businesses, other Wisconsin employers are starting to consider the same possibilities. Wisconsin very recently took dramatic legislative action via 2019 Wisconsin Act 185 to help workers and employers during this trying time.
The scope of these changes is perhaps most evident in the revisions to Wisconsin’s rarely used Work-Share program, which took effect on April 17, 2020. In light of these changes, any Wisconsin employer contemplating layoffs, partial furloughs or pay reductions should give serious consideration to the Work-Share program. Some of the most attractive changes to the program, however, are only available through July of 2020 or are otherwise time-limited, so Wisconsin employers should invest the time now to determine if participation makes sense.
The revised Work-Share program is considerably more flexible for Wisconsin employers and potentially much more favorable for participating employees. It is quite clear that federal and state policymakers are encouraging employers to avoid layoffs, particularly in the coming months.
What’s Work-Share Again? Like many states, Wisconsin maintains a short-term compensation program intended to help employers minimize layoffs by implementing uniform work-hour reductions across defined employee groups and permitting those participants to receive partial UI benefits while their hours and wages are reduced. Participants in an approved Work-Share plan do not have to engage in weekly job-search efforts to continue to receive their partial UI benefits. Due to a variety of restrictions and limitations—common to such programs in other states—and a relatively strong economy since the program’s initial launch in 2013, the Work-Share program has not historically drawn much employer interest.
How Work-Share Differs from Regular Partial UI Benefits. Ordinarily, to qualify for regular partial UI benefits in Wisconsin, employees could not earn more than $500 in gross pay per week. Under the state’s Work-Share plan, however, employees qualify for partial UI benefits even if their gross weekly pay exceeds $500. As a result, higher-paid hourly employees and salaried exempt employees can participate in a Work-Share plan.
What are the Employer-Friendly Changes? With Act 185’s changes to the program, Work-Share should be carefully considered by any Wisconsin employer contemplating combined pay and hours reductions in the coming weeks and months. Under Act 185, and through the end of 2020, new Work-Share plans:
- Do not need to be limited to a particular work unit and can instead cover any combination or grouping of employees
- Only need to cover two positions (prior law required many more)
- May reduce participants’ working hours by 10-60% of normal hours
- Need not apportion the reduction in work hours equally among the employees in the plan (Employee A may have 15% hours reduction and Employee B may have 55% hours reduction)
Why Work-Share is More Compelling Right Now. Two significant features of the federal CARES Act have made Work-Share a more compelling option in the coming months. First, any applicant receiving state UI benefits, including through short-term compensation programs like Work-Share, will also be eligible to receive an additional $600 per week in federally funded UI benefits through July 31, 2020 under the CARES Act—regardless of the amount of their partial UI benefits payment. Second, any UI claims paid for weeks occurring after March 12, 2020 and before December 31, 2020 will not be charged to an employer’s UI account as normally provided and thus will not negatively affect the employer’s Wisconsin UI tax rate.
To illustrate the unusual benefits currently available through an approved Work-Share plan, we provide three hypothetical employee profiles below. Employers interested in other hypothetical employee profiles should consult the UI Division’s online benefits calculator.
Work-Share Employee A (full-time, hourly)
- Regularly works 40 hours/week and earns $15 per hour, or $600 per week (and is otherwise eligible for unemployment benefits).
- During Work-Share plan, weekly hours are reduced by 25% to 30 hours, for weekly pay of $450.
- If Employee A were not working at all, A’s weekly UI benefit rate would be $370 per week.
- During Work-Share plan, Employee A would receive partial UI benefits equal to 25% of $370 each week ($92.50).
- Through July of 2020, Employee A would also receive an additional $600 each week.
- Therefore, through July 2020, Employee A would receive $692.50 in benefits per week.
- Through July 2020, Employee A’s weekly wages + benefits would be $1,142.50.
Work-Share Employee B (full-time, salaried)
- Regularly works 40 hours/week and earns $1,000 weekly salary (and is otherwise eligible for unemployment benefits).
- During Work-Share plan, weekly hours are reduced by 40% to 24 hours, for weekly pay of $600
- Employee B would not be eligible for regular partial UI benefits because B’s weekly pay exceeds $500. For Work-Share benefits calculation purposes, we first determine B’s weekly UI benefit rate, which would be $370.
- During Work-Share plan, Employee B would receive partial UI benefits equal to 40% of $370 each week ($148).
- Through July of 2020, Employee B would also receive an additional $600 each week, for a total weekly benefit of $748. Without participation in the Work-Share plan, Employee B would not be eligible for any UI benefits whatsoever.
- Through July 2020, Employee B’s weekly wages + benefits would be $1,348.
Work-Share Employee C (part-time, hourly)
- Regularly works 25 hours/week and earns $20 per hour, or $500 per week (and is otherwise eligible for unemployment benefits).
- During Work-Share plan, weekly hours are reduced by 20% to 20 hours, for weekly pay of $400.
- If Employee C were not working at all, C’s weekly UI benefit rate would be $260 per week.
- During Work-Share plan, Employee C would receive a partial UI benefit equal to 20% of $260 each week ($42).
- Through July of 2020, Employee C would also receive an additional $600 each week, for a total weekly benefit of $642.
- Through July 2020, Employee C’s weekly wages + benefits would be $1,042.
What’s Happening Now? In the few days since passage of Act 185, the Wisconsin UI Division has moved swiftly to create a new Work-Share application form and updated guidance for employers. The Department of Workforce Development has also done its part to publicize these changes, including issuing a press release on April 27, 2020 that strongly encourages employer participation.
What’s the Process? The Work-Share program requires employers to submit an application to the UI Division with information about each employee who would be working reduced hours during the term of the plan. The intent of Work-Share plans is that employers will generally hold the amount of the hours reduction steady during the term of the plan, although employers may request modifications during the plan. After the UI Division reviews and approves the plan, participating employees on the approved plan would apply for partial UI benefits as they normally would. Significantly, a Work-Share plan cannot take effect until it is approved and thus cannot be applied retroactively.
Other Key Provisions. A Wisconsin Work-Share plan may not include any employee hired within three months of the effective date of the plan or any temporary or seasonal employees. During the term of a Work-Share plan, an employer must maintain any health insurance coverage and any retirement plan coverage under the same terms and conditions as if the employees were not participating in a Work-Share plan. In the Work-Share application process, employers also need to describe the manner in which the hour-reduction plan will be communicated to employees.
What’s the Cost to Employers? While there is no application or processing fee, Wisconsin employers will need to invest the time to consider which employees should participate, how much each employee’s hours should be reduced and the resulting operational impact. Once approved, if an employer wants to make modifications to the prescribed hour reduction indicated in the approved plan, it will need to seek approval of the modification. Seeking frequent plan modifications is not ideal, but in the right circumstances this additional effort may well be worth it.