Job Sharing Thoughts!

Work Sharing Program

As a potential alternative to layoffs, employers should consider the EDD's Unemployment Work Sharing Program.

The work sharing program allows employers to reduce employee work schedules rather than laying off workers, while allowing these employees to simultaneously collect partial unemployment benefits for the time reduced.

For example, instead of laying off 20 percent of employees, an employer could reduce employees' hours by 20 percent and unemployment insurance (UI) would pay part of the difference in wages to employees. The program helps employers keep their workforce intact during a slowdown, enabling them to ramp up business activity more quickly as conditions improve.

Work Sharing Requirements and Criteria

To participate, employers must submit an application to the EDD. In the past, employers would have to submit the Work Sharing Unemployment Insurance Plan Application (DE 8686) in writing, but in response to the COVID-19 pandemic, the Legislature and Governor moved the program completely online and streamlined the process, which became permanent in 2022. The Work Sharing Application is now available online.

To be eligible for work sharing, the EDD states that employers must meet all of the following requirements:

• Be a legally registered business in California.

• Have an active California State Employer Account Number.

• At least 10 percent of the employer's regular workforce or a unit of the workforce, and a minimum of two employees, must be affected by a reduction in hours and wages. (Temporary, seasonal, leased and intermittent employees cannot participate in the work sharing plan.)

• Hours and wages must be reduced by at least 10 percent but not exceed 60 percent.

• Health benefits must remain the same as before, or they must meet the same standards as other employees who are not participating in work sharing. Any reductions in health benefits must be applied equally to all employees, those participating in the plan and those that are not.

• Retirement benefits must meet the same terms and conditions as before, or they must meet the same as other employees not participating in work sharing. Any reductions in retirement benefits must be applied equally to all employees, those participating in the plan and those who are not.

• The collective bargaining agent of employees in a bargaining unit must agree to voluntarily participate and sign the work sharing application.

• Identify the affected work units to be covered by the work sharing plan and identify each participating employee by their full name, Social Security number and any other information required by the EDD.

• Notify employees in advance of the intent to participate in the work sharing program. If the employer cannot notify the employees in advance, the employer must explain why.

• Identify how many layoffs will be avoided by participating in the work sharing program.

• Provide the EDD with any necessary reports or documents relating to the work sharing plan.

• The employer must attest that participation in the program is consistent with its employment obligations under federal and state laws.

One downside to the work sharing program is that it's administratively burdensome. In addition to the application itself, once approved, employers must send weekly certifications to the EDD for each participating employee. Employers will be charged for work sharing unemployment insurance in the same manner as regular UI benefits. While this has the potential to increase employers' UI tax rate, layoffs would have the same result when the employees who were let go file for unemployment benefits.

Employers should consult with legal counsel to determine if the work sharing program is a good strategy given their particular circumstances. The program may allow employers to avoid layoffs and stay in operation at a reduced capacity.

The EDD’s director must approve work sharing plans. For more information about the work sharing program, visit EDD’s work sharing webpage.