Employee reduction program options

It is important that employers review all of these programs to determine how you can support your workforce and manage your cash flow.

Program #1 – What is the workshare program?

Work Share is a program that permits employers to maintain operational productivity during declines in regular business activity instead of laying off workers.  With the plan, rather than being laid off, eligible employees work a reduced number of hours in the workweek and receive a portion of weekly unemployment benefits.  By participating in Work Share, employers are able to retain employees and avoid the expense of recruiting, hiring and training new employees. With the Work Share program, unemployment benefits are based on a percentage of the reduced hours of work and pay.  The reduction in work hours must result in an equivalent reduction in wages.

Program #2 – Temporary Leave vs. Termination

Due to the uncertainty regarding potential congressional action on how furloughed workers will be able to access federal resources, employers are strongly urged to place employees on temporary leave as opposed to termination. There is no additional cost to employers, employees remain eligible for unemployment benefits and they may remain eligible for potential federal assistance.

Steps for employers placing employers on temporary unpaid leave:

• Do not terminate the employee – specify a temporary / indefinite leave with return to work expected that is within 120 days.
• Do not create a contractual obligation to bring the employee back to work – let the employee know that the situation is fluid and subject to change.
• Provide the employee with a formal Unemployment Compensation Notice. Employers will need to provide their Employer Account Number and Federal Identification Number.
• Communicate to the employee about their rights. Under Governor Whitmer’s recent Executive Order, workers placed on leave, or are unable to work because they are sick, quarantined, immunocompromised, or have an unanticipated family care responsibility, are eligible for unemployment insurance benefits.
• Ensure employers are provided information on how to obtain unemployment insurance benefits. A factsheet can be found here.

Program # 3 – The Families First Coronavirus Response Act

U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. Effective April 1 – December 31, 2020.

Who Is Covered

Employers with fewer than 500 employees are covered although the Secretary of Labor has the authority to exempt small businesses of fewer than 50 employees where the new requirements “would jeopardize the viability of the business as a going concern.”  Although large employers with more than 500 employees are not covered by the Act, many have elected to award some paid leave. Because it is unknown whether there will be any exemptions for small employers, all employers with fewer than 500 employees should be prepared to comply.

What Is Required

Eligible employees must be given up to 12 weeks of leave – the first 10 days unpaid but the remainder paid – when the employee is unable to work (or telework) to care for the employee’s minor child whose school or daycare is closed or whose child-care provider is unavailable due to COVID-19.

Although the first 10 days of leave are unpaid under the Act, the employee may elect to substitute accrued paid leave for unpaid days.  The duration of the leave is paid at two-thirds the employee’s regular rate of pay for up to $200 per day or $10,000 in the aggregate. 

Program # 4 – Emergency Paid Sick Leave Act

Who Is Covered

Private-sector employers with fewer than 500 employees and all public-sector employers are covered.  Health-care providers and emergency responders may be exempted. 

What Is Required

Eligible full-time employees may take up to 80 hours of paid leave for a qualified reason.  Full-time employees receive the average number of hours they normally work in two weeks. Part-time employees may take the number of hours that they work for over two weeks. The paid leave is available for immediate use. 

Reasons for Leave

There are six (6) reasons for emergency paid sick leave under the Act:

1. The employee is subject to a legal quarantine or isolation order;
2. The employee has been advised by a health-care provider to self-quarantine;
3. The employee is symptomatic and seeking a diagnosis;
4. The employee is caring for a person who is subject to a legal quarantine or isolation order or who has been advised by a health-care provider to self-quarantine (as described in Reasons 1 and 2);
5. The employee is caring for a son or daughter whose school, daycare is closed or child-care provider is unavailable due to COVID-19 precautions;
6. “The employee is experiencing any other substantially similar condition specified by the Secretary of HHS”

Click on each reason to reveal the rate of pay for each leave

1. The employee is subject to a legal quarantine or isolation order.
2. The employee has been advised by a health-care provider to self-quarantine.
3. The employee is symptomatic and seeking a diagnosis.
4. The employee is caring for a person who is subject to a legal quaratine or isolation order who has been advised by a health-care provider to self-quarantine(as described in Reason 1 and 2).
5. The employee is caring for a son or daughter whose school, daycare is closed or child-care provider is unavailable due to COVID-19 precautions.
6. The employee is experiencing any other substantially similar condition specified by the Secretary of HHS.

Eligible to be paid at employee’s regular hourly rate, up to $511 per day ($5,110 in the aggregate).

Eligible to be paid at employee’s regular hourly rate, up to $511 per day ($5,110 in the aggregate).

Eligible to be paid at employee’s regular hourly rate, up to $511 per day ($5,110 in the aggregate).

Eligible to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2000.00 in the aggregate(over a 2-week period)

Eligible to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12000.00 in the aggregate(over a 12-week period)

Eligible to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2000.00 in the aggregate(over a 2-week period)

Employer Next Steps

The Act creates significant new financial and administrative obligations for employers.  Because the Act will not require employers to provide paid time off to employees who were laid off before the Act taking effect, many employers are faced with a difficult but urgent decision concerning staffing.