Tuesday, March 31, 2009

Job Sharing and CA Work Sharing Unemployment Insurance Program

Job sharing programs have been around for many years. This type of work arrangement, where usually two people share one full time equivalent employment time slot, typically a 40 to 60 hour commitment, has come to my attention a few times in the last month or so. I was careful not to frame it as sharing one job as it is not necessary for it to be a share of a “job” or position. It merely means the sharing, by two or more individuals, of one employment slot (think of it as a labor budget item) that generally equates to one full time salary and related benefits.

The challenging economic environment we face is the driver causing this work arrangement to be discussed with more frequency lately. There are a few concepts I’d like to address…one being “job sharing” which I’ll discuss first. The other is California’s “Work Sharing Unemployment Insurance Program” which I will address later in this article. The main difference between the two is that the latter provides for unemployment benefits for the portion of the full time position being cut back by the employer (e.g. cutting back from a 5 day work week to 4 days to save payroll costs).

I don’t think job sharing is generally a viable option in the field. My interest in researching this topic was driven by a desire to help contractors keep their office personnel intact through this down cycle and to expand the possibilities for office personnel, and their employers, even in the good times! If the contractor could divide office responsibilities that normally take 40 hours or so per week to accomplish into two (or more) pieces, this could provide for many benefits for all parties concerned including work/life balance and retention of income for employees and reduced business costs (including

I see job sharing as a potential win-win for both employer and employees. There are many reasons job sharing can make sense including offering a better work/life balance for employees. It can also help to keep more people employed and also possibly get the best from everyone in achieving common objectives required of a given position. Other benefits for employers include:

1) Each employee may be better rested, focused and better managers of their time improving efficiencies
2) The division of responsibilities could allow for leveraging each job sharer’s strengths while mitigating any weaknesses
3) Happier employees as they can tend to their personal lives more easily
4) Less time off for dentist appointments and the like as they can do on their personal time easier during the week
5) If there is a short term surge in work in the office, the existing human resources are more easily expandable as hours can be ramped up to cover those spikes in work
6) Can reduce overtime costs as fewer workers will work greater than 40 hours per week

An often cited downside to job sharing programs is the potential loss of benefits. Many employers use a 32 hour per week minimum required to qualify for employee benefits such as health insurance, 401(k), etc. There are many ways to approach this issue although, as always, it is important to be careful how you as an employer deal with these issues as unintended consequences could result (setting unwanted precedents, etc.). A policy should be established and followed for job sharing programs including employee benefits issues. Sometimes an employee may have a benefit deemed important to him or her through another family member (health insurance being an obvious example) so the issue is mitigated. If one of your job share employees who is in the job share arrangement waives the benefits, perhaps consider allotting those benefits to the job sharer who does not. Again, be very careful as circumstances could change (what if the spouse who is providing the health insurance suddenly gets laid off?). As with everything, consult with experts in order to better understand and comply with all the laws and regulations.

Consider holding an office staff meeting and discuss the possibility of a job sharing program. You may be surprised at your employees’ willingness, for a number of reasons, to be part of such a program. There seems to be a fear on the part of employees actually desiring this type of arrangement to ask for it. Chances are very good that your company has never had such a program in place. You may have never even considered it and/or think it may not a workable arrangement. The environment and office culture may be prohibitive factors for any of your employees to ask for such an arrangement. Some of them may want more time with their children, or grandchildren, or other personal reasons. If you, driven perhaps by today’s current economic climate, raise the issue during a staff meeting, you may find that you have a few people willing to get involved in the arrangement providing benefits to you, as the employer, you never realized were possible.

Another viable option to consider is California’s “Work Sharing Unemployment Insurance Program” which needs to be applied for. These “work sharing plans” are approved for a six month period. Although this program appears to market itself as a solution for short term market downturns, I have heard that consecutive six month plans have been approved for employers. The way the program basically works is by pro rating unemployment benefits for workers in the program to mitigate the lost income from reduced hours. In order for a plan to be approved by California, the employer must apply this program to “at least 10% of it’s regular work force or a unit of the work force” with at least 2 employees participating in the program. The example provided by the Employment Development Department (EDD) is that of an employee reduced from 5 days down to 4 days. The employee would be eligible to receive 20% of his or her unemployment benefits. At the same time, the employer should understand that there will be an impact on the company’s unemployment reserve account which could impact the unemployment insurance tax rate in the future. The net result is still positive for the employer both financially in terms of reduced payroll costs and intangible positives in terms of retention and morale while avoiding the costs of re-hiring, re-training, etc. when business improves.

I recommend consulting with a Human Resources professional as well as a labor law attorney to ensure compliance with all rules and regulations. SingerLewak will be conducting a seminar for business owners addressing various HR issues on May 5, 2009 at 4PM in our Irvine office. The workshop will be led by an HR specialist as well as a labor law attorney. I have asked that these arrangements be included in the discussion. Contact me if you would like more information.

Useful Links

For more on the CA Program http://www.edd.cahwnet.gov/pdf_pub_ctr/de8714bb.pdf

For the CA Program Application

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