COVID – 19 Update: Layoffs and Work Reduction

We have received many phone calls the last few days from our clients asking what options (unfortunately) they have regarding full or partial layoffs. We felt the need to send additional information along with links to make it work in your business.

If you’ve had to shut down, but not close:

If you are a restaurant or other business and have been ordered to shut down, Employees may file for unemployment immediately without being officially laid off. Even if you have chosen to close, or had to close because of reduced workload, it is NOT necessary to officially lay off employees in order for them to file for unemployment.

If you’re slow, but employees working reduced hours:

You can utilize either the Work Sharing* program or the Reduction in Work Hours* program as detailed below. These programs allow you to maintain your workforce, while your employees receive full or partial benefits during this crisis without the need to lay off, or pay out vacation accrual.

If you will likely close permanently (partially or fully) and must lay off:

In this scenario, you will need to officially lay off some, or all of your employees. In this case, the standard process applies, you must provide your employees a final check for hours worked as well as pay out accrued vacation.

*Important to note, using these EDD programs may be administratively demanding, as each week’s hours and pay need to be certified. Also, with these programs, you will need to maintain benefits, including health insurance, 401k, vacation and sick time accrual.

Here are two options for alternatives to full layoffs:

EDD Work Sharing Program

First, California’s Work Sharing Program provides payment of unemployment insurance benefits to eligible individuals if their wages and hours have been reduced. Employers may consider this program as an alternative to layoffs.

The Work Sharing Program may take a week to 10 days to get rolling so if you’re going this route, apply quickly. Employers that wish to participate in the program must first apply (Form DE 8686), then certify each week that affected employees are working reduced hours.

To obtain more information or participate in the Work Sharing Program, visit: https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm

Partial Unemployment Insurance Benefit: A second, more immediate alternative is to use the Notice of Reduced Earnings. This works for employers whose earnings and hours are reduced, but the employees are not laid off. The employer provides (weekly) a Notice of Reduced Earnings (Form DE2063) to the employee on a pay period by pay period basis, and the employee files a claim for partial benefits. An employee may be eligible for partial unemployment insurance benefits if their hours are reduced more than 25% or their weekly pay has dropped more than $25.

This easier to launch than the Work Sharing program, but a form must still be provided to the employees weekly.

For more information on partial unemployment insurance benefits, visit https://www.edd.ca.gov/unemployment/partial_claims.htm

Laying off or reducing work hours for employees is never an easy task, but in this case, look at it as a positive step. You are proactively maintaining your business viability with the hopes of returning to normal with your team intact as soon as this is over, and ensuring your employees receive close to their normal pay and can survive this crisis. Make sure you communicate that to your employees. Either way you choose to go, should you find your business in a tough situation, Infinium HR is here to assist you through the process. Please