COVID-19 Frequently Asked Questions - Work Sharing - Unemployment Insurance
1. Does this affect my Paycheck Protection Program loan? Can I receive both?
The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Currently, the U.S. Small Business Administration will forgive loans if all employees are kept on the payroll for eight weeks and the funds are used for payroll costs, interest on mortgages, rent, and utilities (at least 60% of the forgiven amount must have been used for payroll). Since the loan is only forgivable if certain conditions are met, an employer who has received a PPP loan will need to balance the savings in payroll costs achieved through participation in a Work Sharing program against the obligation to meet the PPP conditions to obtain loan forgiveness. Employers should speak to a financial advisor or attorney regarding the utilization of both the PPP loan and the Work Sharing program if seeking full forgiveness for their loan.
2. If the employer is approved for other COVID-19 federal relief programs, will they still be eligible for Work Sharing?
This must be examined on a program by program basis. Employers should speak to a financial advisor or attorney regarding the utilization of multiple federal programs simultaneously.
3. Are Work Sharing employees eligible for the additional $600 Federal Pandemic Unemployment Compensation (FPUC) weekly benefit?
Yes, employees that are covered under a Work Sharing program will receive the Federal Pandemic Unemployment Compensation (FPUC) $600 weekly payment, in addition to their prorated unemployment compensation, until the week ending July 25, 2020 unless extended by Congress. Covered employees are eligible for the FPUC benefit while it is in effect, no matter how many hours the employees’ work has been reduced in the Work Sharing plan.
4. What if I already underwent layoffs, can I bring former employees back with a Work Sharing plan in place?
In the context of reopening businesses closed temporarily due to the pandemic, Work Sharing can serve as a means of bringing most or all of a temporarily laid off workforce back to the job, even if social-distancing measures, a decline in business, or other factors prevent operating at full staffing levels immediately. Specifically, this benefit may be made available to individuals returning to work with reduced hours who worked for the employer prior to the temporary layoff due to COVID-19. The traditional Work Sharing policy is that employees need to be employed for at least three months prior to starting a Work Sharing plan. However, under a state of emergency, the Secretary has the discretion to waive certain criteria with good cause. In the context of reopening a business, the employer must certify that all employees were employed by their company prior to the temporary closure/layoff due to COVID-19.
5. Is there a deadline to submit my Work Sharing application?
For businesses using Work Sharing as a COVID-19 reopening program, there is an application deadline of 90 days following the expiration of the CARES Act on December 31, 2020. The deadline to receive these applications will be Wednesday, March 31, 2021, but the Secretary reserves the right to review and extend this deadline if needed.
6. Can an employer's Work Sharing plan be backdated to when the pandemic assistance period began?
A Work Sharing plan must begin on a Sunday at least 7 days after a Work Sharing application is submitted. However, this waiting period may be waived by the Secretary for good cause. A Work Sharing plan may not be backdated prior to the date when the application is submitted by an employer unless an employer can demonstrate, with verifiable evidence, that all requirements and certifications for an approved Work Sharing plan were already enacted by the employer other than affected employees receiving UI benefits. In this case, plans may be approved retroactively, but not for more than 30 days prior to the date the application was submitted. Work Sharing plans will be evaluated on a case-by-case basis to determine if there is good cause to waive the 7 day waiting period before a Work Sharing plan can be enacted.
7. How will a Work Sharing plan impact employer unemployment taxes?
A Work Sharing plan will have no adverse impact on an employer's unemployment taxes in Maryland. Maryland will not be increasing UI taxes charged to employers due to Work Sharing benefits paid through December 31, 2020, since these benefits are fully federally funded as part of the CARES Act. Therefore, the benefits paid to employees covered by a Work Sharing plan, including the $600 additional benefit paid between April 4 to July 25, will not increase the employer’s contribution rate or amount.