Employers' FAQs about the Shared Work Program
- How will participation in Shared Work affect an employee's take home pay?
- How does part-time work affect an employee's participation in this program?
- How long does a Shared Work plan last?
- How much can employees' hours be reduced?
- Do employees' hours have to be reduced every week to stay on the program?
- Who selects which employees will participate?
- How long does it take to complete the application?
- Is it possible for an employer to have more than one plan?
- Is it possible to add additional employees to an existing plan?
- Do employees have to use their accrued vacation and/or sick time before they are eligible for Shared Work benefits?
- What other kinds of deductions are made from Shared Work benefits?
- Are Shared Work benefits taxable?
- If a full layoff occurs, how are an employee's unemployment benefits affected by prior payment of Shared Work benefits?
- How does a vacation shutdown affect an employee's benefits?
- How does participation in Shared Work affect our unemployment tax rate?
- Q. How will participation in Shared Work affect an employee's take home pay?
- A. Participating employees will be paid by their employer for the hours they work and compensated by the Unemployment Insurance Program for their "lost time" through Shared Work benefits. Shared Work benefits make up about one-half of an employee's lost income due to reduced hours.
- Q. How does part-time work affect an employee's participation in this program?
- A. Earnings from other employment are always deductible from Shared Work benefits.
- Q. How long does a Shared Work plan last?
- A. A Shared Work plan can last from two weeks to 52 weeks, depending on how long you project the slowdown will last. Since a plan can be ended at any time, it is usually best to set up your plan for a longer period than you think you will need.
- Q. How much can employees' hours be reduced?
- A. In order to be approved, the plan must call for no more than a 25 percent reduction in hours. The most common percentage is 20 percent, which equals one day of work for most full-time employees.
- Q. Do employees' hours have to be reduced every week to stay on the program?
- A. No. For example, if you have ten employees in your plan, in one week, all ten may have reduced hours; in the next week, five may have reduced hours while five work full-time; and in the next week, all ten may work full-time. The number of employees who have reduced hours in any week depends on your business needs.
- Q. Who selects which employees will participate?
- A. You do. The only requirement is that each plan participant must have been a full-time employee with your company for at least six months prior to the start of the plan. “Full-time hours” normally means 40 hours per week. Owner/officers of a corporation can be included in the plan only if they have elected optional UI coverage, and they work no more than 40 hours per week as full-time employees.
- Q. How long does it take to complete the application?
- A. The application asks a few basic questions about your business, and requires a list of participating employees. We usually grant approval of qualifying submitted plans within a week of submission.
- Q. Is it possible for an employer to have more than one plan?
- A. Yes, but no employee may be on more than one plan at any time, and no plan can be longer than 52 weeks.
- Q. Is it possible to add additional employees to an existing plan?
- A. Yes, under certain circumstances. Please consult with the Shared Work Analyst (contact information is listed on the Shared Work homepage).
- Q. Do employees have to use their accrued vacation and/or sick time before they are eligible for Shared Work benefits?
- A. No. The manner in which leave time is used depends on your company policy and/or labor agreement(s). Shared Work pays benefits only for those periods of unemployment caused by the employer. Just like regular unemployment benefits, Shared Work benefits are not payable to an employee who is not working due to illness, injury or vacation.
- Q. What other kinds of deductions are made from Shared Work benefits?
- A. Social Security benefits, some pensions, and workers' compensation are deductible from Shared Work benefits. Overpayments owed to the Minnesota Unemployment Insurance Program and child support are deducted from Shared Work benefits.
- Q. Are Shared Work benefits taxable?
- A. Yes. Just like regular unemployment benefits, Shared Work benefits are taxable for Minnesota and Federal income tax purposes. At the end of the year, any employees who received Shared Work benefits will be issued an IRS Form 1099-G listing the total benefits paid to them during the preceding calendar year.
- Q. If a full layoff occurs, how are an employee's unemployment benefits affected by prior payment of Shared Work benefits?
- A. Upon full layoff the employee becomes eligible for their full weekly benefit amount. Their maximum benefit amount will be reduced by the amount of Shared Work benefits they have already received for that benefit year. Employers must report any layoff at the time it occurs in order for the affected employee to receive full unemployment benefits instead of the reduced Shared Work amount.
- Q. How does a vacation shutdown affect an employee's benefits?
- A. Uniform shutdowns must be disclosed in the Shared Work plan application for employees who are eligible for full unemployment benefits during a shutdown to remain in the Shared Work plan. Vacation pay is deductible from the employee's weekly benefit amount dollar-for-dollar.
- Q. How does participation in Shared Work affect our unemployment tax rate?
- A. Your tax rate is based, in part, on the amount of benefits paid. Since Shared Work is used in lieu of a full layoff, you should compare the benefits paid for full layoffs to those paid under Shared Work. One individual receiving 100 percent benefits roughly equals five individuals receiving 20 percent Shared Work benefits.
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