Yes, employees who remain employed but have their hours of work substantially reduced may be eligible for unemployment compensation. This determination varies from state to state. Unemployment eligibility requirements, such as a minimum length of employment and specified earnings in determination periods, typically still apply.
Fortunately many states realize that workers may face significant financial challenges while still employed when their pay is decreased or their work schedules are reduced. These state unemployment agencies will offer what are referred to as partial unemployment benefits. Employees may not realize that this option is available to them because they still hold a job.
Some states go even further and offer partial unemployment benefits through programs that are referred to as “Shared Work Programs” or “Work Share Programs.” These are voluntary arrangements between an employer and the state unemployment agency. An employer expecting to implement a reduction in hours and/or pay that will impact a group of workers should check with the state unemployment office to see whether this type of program is available. Agencies may also fund loans to the employer with repayment terms depending on the program.
While employers’ experience ratings for unemployment insurance can be negatively impacted by claims related to partial unemployment benefits and Shared Work Programs, potentially increasing their unemployment taxes, employers benefit when employees are not distracted by financial stress and can be more more productive. Also, employers may benefit by retaining trained and experienced staff who are adequately compensated in difficult times.
Please Note: This material is provided as general information and is not a substitute for legal or other professional advice. Contact the Knowledge Center for more information.
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