The Wisconsin Work Share Program – Another Personnel Option for Employers to Consider During the Coronavirus Pandemic

Apr 27, 2020 | John C. Gardner

In 2013, Wisconsin passed legislation pursuant to which an employer contemplating the need to lay off a portion of its workforce could submit a “Work-Share Program” to the Wisconsin Department of Workforce Development (“DWD”) to avoid those layoffs.  Under such a program, the employer would reduce the work hours (and pay) of a certain number of its employees, and the employees would, in turn, receive unemployment benefits in an amount pro-rated in connection to their reduction in hours.  For various reasons, including the fact that the economy was in relatively good shape from the time the legislation passed until early 2020, relatively few Wisconsin employers have actually taken advantage of the law. 

Now, in light of the COVID-19 pandemic, as well as Wisconsin’s Safer at Home Orders, the economic situation has obviously changed.  In addition, on April 15, 2020, Wisconsin passed 2019 Wisconsin Act 185 (the “Act”) which, among other things, expanded the Work-Share Program to a significant degree.  As a result, it will likely make sense for Wisconsin businesses contemplating layoffs now or at any time through the end of the year to take a closer look at the potential for creating an appropriate work-share plan.

How could an employer use a work-share program in the current situation?

In order to take advantage of the Work-Share Program (as temporarily amended by the Act), an employer must do each of the following:

  1. Select at least two regularly-employed Wisconsin employees (i.e., individuals who have been employed for at least three months as of the start date of the program) for inclusion in the program;
  2. Reduce the work hours of the subject employees by a set percentage – at least 10%, but no more than 60% – that will remain consistent every week that the plan is in place;
  3. Identify the period of time that the plan will cover. Per the law, plans can cover up to six months in a five-year period, although the same employer can institute more than one plan;
  4. Maintain coverage for health insurance and any other defined benefit or contribution plans on the same terms that would apply under normal circumstances;
  5. Identify how subject employees will be notified of their reduction in hours; and
  6. Estimate the number of layoffs that would occur in the absence of the plan.

In addition, an employer must submit a completed Work-Share Plan Application and obtain DWD approval for the same.  An updated application from the DWD is available here.  

If approved by the DWD, employees subject to a work-share plan will receive an amount of weekly unemployment benefits directly proportional to the reduction in their work hours.  For example, an employee who normally works 40 hours per week and has her hours reduced to 30 hours per week (a 25% reduction) would be entitled to a weekly unemployment benefit equal to 25% of the maximum unemployment benefit to which she would otherwise be entitled.  So, assuming that the employee is eligible for the maximum weekly benefit rate of $370, she would receive $92.50 ($370 x .25) in unemployment benefits during each week of the plan.       

What else should employers know about work-share plans?

Although we covered the basics of the Work-Share Program above, there are several additional points that employers should be aware of. 

First, Wisconsin does not limit participation in approved plans to hourly or non-exempt employees.  Rather, the DWD has made clear that salaried and exempt employees can also participate, as can employees who work on a part-time basis.

Second, through the end of 2020, unemployment benefits paid to participating employees through an approved work-share program will not impact the tax rates of their employers.

Finally, and perhaps most significantly, from now through July 25, 2020, employees who participate in an approved work-share plan will be eligible for the $600 weekly enhanced unemployment benefit provided through the federal CARES Act.  Critically, unlike the proportional approach that Wisconsin takes to its provision of unemployment benefits to participating employees, it does not appear that there is any basis for the federal $600 weekly benefit to be reduced, whether on a proportional basis or otherwise.  Instead, if a participating employee is entitled to receive at least $1 in normal Wisconsin unemployment benefits in a given week, he or she will be entitled to receive the full $600 federal benefit. 

Whether intended or not, this situation could lead to certain participating employees earning as much as, or even considerably more than, they would have earned from just remaining in full-time work.  For example, take an employee who makes $20 per hour, and has his weekly hours worked reduced by 20 percent, from 40 to 32 hours, pursuant to an approved work-share plan.  For his normal hours worked, the employee would earn $640 (32 hours x $20/hour).  For his Wisconsin unemployment benefit pursuant to the work-share plan, he would earn $74 ($370 (his maximum weekly benefit amount) x 20% (the percentage by which his normal weekly hours were reduced)).  Taken together, this amount – $714 – is less than the $800 (40 hours x $20/hour) that the employee would have earned had he worked his full 40 hours.  However, until the end of July 2020, he would also be entitled to an additional $600 under federal law, for a grand total of $1,314 – far above his normal weekly earnings.  

In light of the above, employers considering whether to adopt a work-share plan will need to look closely at the impact adopting such a plan would have on their workforce, especially under circumstances in which some but not all employees in a given department would be subject to the plan, and/or where the employees being considered for the plan are lower wage earners, relatively speaking.      

Obviously, because some of these changes are so new, and because Wisconsin’s Work-Share program has been historically underutilized, there are bound to be a number of questions and concerns that arise relating to employers that are considering such a plan.  Please contact John Gardner or any other member of DeWitt’s Employment Relations practice group if you need any assistance with respect to these challenges.