Arizona Unemployment Questions

What is the Shared Work Program?
The Shared Work Unemployment Compensation Program is an alternative for employers faced with a reduction in force. It allows an employer to divide the available work or hours of work among a specified group of affected employees in lieu of a layoff, and it allows the employees to receive a portion of their Unemployment Insurance (UI) benefits while working reduced hours. The Shared Work Program is not available to an employee unless the employer for whom the individual is currently working reduced hours completes an application which then must be approved by the Department of Economic Security. An approved Shared Work Plan is valid for one year and an employee may be eligible for up to 26 weeks of Shared Work benefits.

What are the eligibility requirements?
The employee is eligible for Shared Work benefits for each week in which:

• His or her normal weekly hours are reduced by at least 10% but no more than 40%,
• The employee files a claim and meets the eligibility requirements for regular Arizona benefits,
• The employee has not exceeded the maximum benefit amount that is payable within the benefit year of his/her UI claim.

How does the Shared Work Program differ from regular Unemployment Insurance?
Under the Shared Work Program, an employee is not required to:

• Be available for other work,
• Conduct an active search for work,
• Apply for or accept work other than for the Shared Work employer.

An employee who participates in a Shared Work plan may not receive benefits for any week in which he or she receives regular UI benefits, nor may an employee participate concurrently in two or more Shared Work plans.

As an employer, how will the Shared Work Program affect my UI Tax Account?
Shared Work benefits are charged against reimbursement and experience-rated employer accounts in the same manner as regular benefits are charged. However, any experience-rated employer having a negative reserve in his/her tax account and having employees paid Shared Work benefits during the fiscal year July 1 through June 30 may have a surtax added. The surtax will be added to the computed rate of negative reserve accounts.

What other criteria must the employer meet?
The employer must certify that, for the duration of the Shared Work plan, the reduction in hours replaces a layoff which would have resulted in a reduction of at least the same number of hours of work.

What are the advantages (and disadvantages) of participating in the Shared Work Program?
Advantages to the Shared Work Program

• Production and quality levels are maintained and rapid recovery to full capacity is possible through retention of an experienced workforce.
• When the economy recovers, administrative and training costs of hiring new employees are eliminated.
• Affirmative action gains are protected.
• Employee morale remains high.
• The impact of a recession is more equitably distributed because most recently hired workers who would have been most susceptible to layoff are retained.
• Employees retain their skills and advancement opportunities.
• Consumer spending patterns remain more stable, which could result in a milder recession.
• Public Assistance expenditures are lessened.

Disadvantages to the Shared Work Program

• Valuable employees who are able to locate full-time employment elsewhere may be lost.
• Overhead costs are not reduced proportionately to the reduction in hours.
• Work scheduling may be more difficult.
• Senior employees suffer a reduction in hours and income.

How can an employer apply for a Shared Work Plan?
A Shared Work Plan Application is available online. Your completed application and list of participants should be submitted at least 10 days prior to the date you wish your plan to begin. You will be notified by mail of the approval or disapproval of your plan. An employer may have two or more plans in effect at the same time (to cover separate groups of employees). Each plan must include at least two employees, and all must be identified by name and Social Security Number. Each plan must specify the beginning date for the plan. On the application, the employer must certify that:

• Each employee listed on the plan has been paid at least $1,500 in wages from the business during the six months prior to the effective date of the plan.
• For the duration of the Shared Work plan, the reduction in hours replaces a layoff, which would have resulted in a reduction of at least the same number of hours of work.
• He or she has read and understands the Shared Work information and application instructions and is aware of the potential effects on his or her UI account if benefits are paid to his or her employees.

In addition:

• The plan application must specify any changes the affected employees will experience in fringe benefits.
• Written approval of the plan must be obtained from any collective bargaining representative representing any employee listed on the plan.