Work Sharing - A Smart Alternative to Layoffs - Unemployment Insurance
Dear Maryland Employer,
In 1984 the Maryland General Assembly enacted legislation establishing the Work Sharing Unemployment Insurance Program. Work Sharing is a voluntary program that provides an alternative to layoffs for employers faced with a temporary, non-cyclical decline in business due to lower economic activity. The program is designed to avoid layoffs by preserving jobs for trained workers. Qualified employers, who participate in Work Sharing, are able to retain an entire employee group by reducing that group's hours of work by a percentage equal to the total reduction of hours that would have been achieved by a layoff.
Work Sharing offers many benefits to both employers and workers. Using Work Sharing, an employer can maintain high productivity and quality because the existing trained work force remains in place. When business improves, the employer has an intact work force and have avoided the time and expense of rehiring and retraining. Work Sharing enables employers to keep productivity and employee morale high because workers avoid the insecurity, unrest, and "bumping" characteristics of layoffs.
For workers, the obvious benefit of Work Sharing is keeping their jobs while avoiding the emotional and financial hardships resulting from unemployment. Employees are not subject to the same conditions as those on regular Unemployment Insurance (UI) such as making an active search for work or accepting offers of suitable work from employers other than the Work Sharing employer. The employees whose hours are reduced receive partial UI benefits to supplement lost wages. Both the employer and employees must develop and agree to the conditions of Work Sharing.
Example: An employer has 20 full-time employees in a unit, each of whom works 40 hours per week. Due to an unexpected reduction in business, the employer must reduce payroll by 25 percent. Instead of laying off 25 percent of the employees, the employer may apply for Work Sharing. If the Work Sharing Plan is approved, affected employees would receive 25 percent of their UI benefits while being paid for hours worked at the Work Sharing employer. When business improves, the employer has retained its trained workforce and may resume normal operations.
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