It might be the help you need to get you and your employees thru a rough patch!
What is the Shared Work Program?
Shared Work is a program offered by Washington State’s Employment Security Department (ESD) designed to help employers avoid layoffs when faced with an economic slowdown or other forms of business disruption. It allows you to reduce an employees’ hours of work in exchange for partial unemployment benefits that would make up for some of their lost wages.
We used it ourselves during COVID, allowing us to to get thru the entire COVID cycle without having to lay off an employee. (Our phones weren’t exactly ringing off the hook in the early part of 2020…)
Here’s what we think are the main benefits of the Shared Work Program….
- You can retain trained staff — Rather than losing employees, you keep them on reduced schedules, which keeps all that tribal knowledge in place, boosts morale, and promotes continuity at a time when you likely need all these things the most.
- You reduce your payroll costs and cash flow. By cutting hours (which can be anywhere from 10% -50%), you reduce what you pay in wages, the amount of cash going out the door when you can’t get it back in terms of revenues generated.
- You gain a new level of staffing flexibility. The shared work program is voluntary and can be adjusted up or gone as you go. An employee can work 40 hours one week and only 20 the next without losing their eligibility for Shared Work benefits.
- It’s a stable program you can rely on for help when you need it . Once you set up a “SharedWork plan” the plan lasts an entire year, plus you can reapply.
- You preserve your reputation as an employer – Keeping people employed, even at reduced hours, tends to preserve goodwill and actually earns employee loyalty.
Key Rules and Requirements
For employers considering SharedWork, here are what you need to know:
| Requirement / Detail | |
| Eligibility (Employer): | You must be a legally registered business in Washington State, have an ESD number, and agree to meet certain reporting requirements which are very simple and straight forward. |
| Participating Employees | Must be “permanent” employees (as opposed to seasonal or temporary) that you can pay hourly (ie. even if salaried you will need to convert them to hourly. You will need a minimum of 2 employees registered to participate. |
| How much reduction? | You can reduce usual work hours between 10% and 50% which also determines how much of an unemployment benefit the employee gets. |
| Benefits continuation | Employers must continue providing the same employee benefits (health insurance, etc.) as they did prior to placing an employee on Shared Work. |
| Duration | A plan can last up to one year; at the end, you can reapply. Employment Security Department |
| Representation & reporting | You can select a representative for your company to coordinate with ESD and with participating employees. You have an obligation to provide certain information and respond to requests promptly. |
The Downside – Pay attention here…
While the SHARED WORK program has many upsides, there are also SOME trade‑offs to take into consideration.
- Experience rating / tax rate: SharedWork does affect your unemployment experience rating, which influences your unemployment insurance tax rate. That said in most cases, if you can avoid a lay off SHARED WORK is less costly.
- Benefit Limits: Employees on reduced hours may run out of benefit eligibility more quickly if benefit earnings are prorated.
- Administrative Costs: You need to track hours, report, maintain benefits, coordinate with ESD etc. For small businesses, this can be extra work.
- Plan duration limits: Since the plan is capped at a year, if disruptions last longer, you can run out of time.
- Employee buy‑in: Even though SharedWork tends to be better than layoffs, some employees may prefer full unemployment or other options, depending on their personal situations. Open and honest communication from management to staff is critical.
Final Thoughts!
If we were advising an employer considering SHARED WORK, here’s what we’d suggest…
- Run the numbers: Estimate what payroll savings you’d get vs. what you’ll still have to pay in wages + benefits + administrative costs.
- Communicate early and clearly with staff: Let them know how the plan works, what their benefits will look like, how much income replacement they can expect.
- Monitor the program’s impact: On morale, on productivity, on cost savings. Be prepared to adjust.
- Consider SharedWork as one tool among others: It’s not always enough if you’re going thru a business downturn that is uniquely severe or prolonged. That said, its often the best way to retain your capacity to rebound!
