Generally, a company would set out any arrangements of short-time working programs in an employment contract. However, to qualify for work-sharing compensation through unemployment benefits, certain conditions need to be met by the employer and employee. Although work-sharing compensation arrangements are recognized by unemployment compensation agencies in 29 states, these can vary from state to state, but broadly involve the following:
- The lack of work needs to have economic reasons or be caused by issues beyond a company’s control, for example, natural catastrophes or federal instructions.
- A company should have considered all the alternatives to minimize the lack of work, for example, by reducing overtime.
- The shortage of work is temporary and it’s predicted that employees will return to a normal work schedule at some point in the future.
- At least 10% of the workforce must be involved (according to California’s Work Sharing Unemployment Insurance program; this may vary by state).
- Employers need to submit their work-sharing plan application ahead of staff being able to claim any compensation.
In addition, work sharing cannot be used by companies to compensate for inventory issues or seasonal business closures. They cannot apply to the program in case of equipment maintenance causing work shortages. Many work-sharing programs are not intended to last longer than 12 months.
More extensive information on prerequisites for the payment of work-share compensation is available in the respective state guidance. Here’s an example by the Maryland Department of Labor.