The Texas Workforce Commission (“TWC”) has implemented a new Shared Work Program which provides employers an alternative to full layoffs to help employers address staffing issues arising from COVID-19. This program allows an employer to reduce an employee’s hours and supplement lost wages with partial unemployment benefits. Shared work unemployment benefits affect the employer’s tax rate at the same rates as other benefit chargebacks. Unemployment benefits paid through the shared work program are charged to the employer’s account and used to compute the general tax rate.
Shared Work unemployment benefits are payable to employees who qualify for and participate in an approved Plan. While employees are not required to participate in the Plan, any employee who qualifies will receive both wages and Shared Work unemployment benefits.
A business may implement a Shared Work Plan only for employees whose hours have been reduced. The program is not intended to subsidize compensation for a seasonal employee during the off-season or for a business that primarily uses part-time employees. Shared Work benefits are available only for wages lost because of a reduction in the employee’s regular hours. The calculation of regular hours may not exceed 40 as the program does not provide overtime compensation. An employee who normally works overtime may not receive shared work benefits for a reduction in their overtime hours.
An approved plan will reduce an employee’s regularly scheduled hours by at least 10% but no more than 40%. The employer must also have at least 10% of its employees in a particular unit affected. There is no regulation on the size of the business who may participate and both hourly and salaried employees are eligible. Businesses may specify different percentages of reduced hours for different employees as long as the reduction meets the 10-40% weekly requirement.
The TWC will calculate an employee’s benefits based on the number of hours the employer defines as normal full-time employment. If the TWC approves the shared work plan, workers who qualify for unemployment benefits receive both wages and shared work benefits. The amount of shared work benefits is the percentage of regular unemployment benefits that equals the percentage reduction in work hours. If the plan is approved, it is effective for one year, but may be renewed upon expiration.
For an employee to be eligible, the employee must:
• be eligible for regular unemployment benefits;
• accept all work offered by the employer for the duration of the shared work plan; and
• be able and available for full-time work.
It is important to note that shared work does not require a one-week waiting period, and participating employees will receive payment for the first claim week. If a participating employee works outside of the specified hours of the shared work plan, the TWC determines whether the employee qualifies for regular unemployment benefits and, if so, pays accordingly. Some employees filing under shared work may be eligible to receive benefits for a given week while others are not, depending on the number of hours the affected employee works in a given week.