 Legal Best Practices
Magazine
Employee Layoffs?
Florida has a Plan
By Sheri McWhorter, JD
Florida businesses are
struggling like never before. Large scale employee
layoffs are announced almost daily. Now more than ever
it is critical that businesses use every available tool
to help them survive until the economy rebounds. Many
Florida businesses are unaware of the availability of a
plan offered by the Florida Agency for Workforce
Innovation that may provide a temporary alternative to
employee layoffs, yet at the same time, allow employers
to reduce their payroll costs by up to 40%.
Florida is one of 18
states in the country offering a Short Time Compensation
(STC) program to assist employers in reducing payroll
costs, while keeping their workforce intact. Under the
STC program, employers reduce employees’ work hours by
between 10 and 40%, and employees receive prorated
unemployment compensation benefits to help replace
earnings lost due to the reduced work schedule. The
goal of this voluntary employer program is to help
businesses reduce payroll costs during the down economy
by using unemployment benefits to offset the cost of
full time wages, while allowing them to maintain their
workforce rather than laying off full-time employees.
This way, when the economy improves, employers can
increase the work hours of their existing employees
rather than having to recruit and hire new employees,
which may also help reduce future recruitment and
training costs.
STC plans provide an
alternative to layoffs by enabling businesses to
apportion payroll reductions across a larger group of
employees than they would have in the absence of an STC
plan. For example, rather than lay off 20% of its
workforce, an employer might reduce the work hours of
its entire workforce by 20% (i.e. move from a 5 day to a
4 day workweek). Employees whose hours are reduced
receive STC benefits, which are Florida unemployment
benefits pro-rated to compensate for reduced work hours.
For
employees, an STC plan would work as follows. An
employee who normally works a 40-hour week at $7.50 per
hour and consistently earns $300 per week would qualify
for $150 per week in unemployment compensation benefits
upon total lay-off. On an STC plan, an employee whose
hours were reduced would receive pay for the hours
worked and an STC unemployment benefit based on the
percentage reduction in work hours. For example, an
employee whose hours were reduced by 20% in lieu of
lay-off would receive pay from the employer for 32 hours
worked at $7.50 per hour, or $240. A 20% reduction of
the normal full $150 weekly unemployment benefit amount
would yield $30 in weekly STC benefits. Thus, the
employee would receive $240 gross pay from the employer
plus a $30 STC benefit for the week. Because Governor
Crist recently signed an agreement with the U.S.
Department of Labor to increase available weekly
unemployment benefits by $25 per week, available STC
benefits are expected to be even greater than those used
in the above example.
Employers wishing to
implement an STC plan must apply to the Florida Agency
for Workforce Innovation. They must certify that the
STC plan will be used solely as a substitute for
temporary layoffs, where the work hours of its normally
full-time workforce must be temporarily reduced due to
economic conditions (rather than to meet the regular
scheduling and payroll needs of the business), and if
work hours were not reduced, at least 10% of its
employees would have been temporarily laid off. At
least 10% of its full-time employees (or 2 employees, if
the business has less than 20 employees) must be on
reduced hours in order to qualify for STC. Part-time
employees (normally working less than 32 hours per week)
and seasonal employees do not qualify.
Some employers who are
aware of the availability of STC plans are hesitant to
participate out of fear their unemployment tax rate may
increase. Although not automatically applied, an
increased unemployment tax rate is possible. However, a
business implementing employee layoffs will almost
certainly experience an unemployment tax rate increase.
By implementing an STC plan to help to minimize employee
layoffs, an employer may be able to minimize the
increase.
Unemployment compensation
benefits used to make payments to employees under STC
plans are funded by the unemployment taxes paid by the
business. You, the employer, have already paid into the
unemployment tax reserve fund. This is your money – you
funded it – so why not consider taking advantage of an
STC plan to help you reduce payroll costs, avoid
layoffs, retain valued workers and better position
yourself and your business for the brighter days ahead.
For more information on
Florida’s Short-Time Compensation program, go to
www.floridajobs.org/unemployment/uc_prog_stc.html.
Sheri D. McWhorter, JD,
SPHR is a Florida Bar Certified Specialist in Labor &
Employment Law, and is the President and Managing
Shareholder of WorkplaceLegal SolutionsSM,
Law Offices of Sheri D. McWhorter, P.A. With offices in
St. Petersburg and Tampa, WorkplaceLegalSolutions
provides employee relations counseling and proactive
employment law solutions to businesses and non-profits
throughout Florida and the greater
Tampa Bay area.
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