In Featured, Payroll

The WorkSharing Program, run by the Massachusetts Department of Unemployment Assistance, is a way to partially lay off employees during a slowdown, without having to let them go or shut your business down completely.

It allows a business to reduce staff hours as much as 60% instead of doing a full layoff. You pay your staff based on the hours actually worked but they also receive pro-rated unemployment checks (usually about 1/2 of what their wages for the same amount of time would have been) to help cover the reduction in their regular wages. Your employees DO NOT have to file a claim or report to an unemployment office each week to show they’ve been looking for work, since they are still employed by you. Unemployment checks are delivered to your office and distributed with your regular payroll – employees do not have to pick them up at the local unemployment office.

Your company can decide to have only certain “units” or parts of its workforce participate (for example, you have a backlog in one department but need to reduce hours in another) or can apply the WorkSharing program across the board.

Since you set up your own WorkSharing Plan (within required guidelines), and can end participation at any time, it is very flexible. Once the plan has been established you administer it online. It is very quick and easy to do, generally only requiring that you enter the actual hours worked by each participant each pay period.

WorkShare payments count against your state unemployment account, which WILL result in a higher SUTA rate the following year, but since you are only paying partial benefits, it does not impact you as much as a full layoff would. And since your staff is still employed and receiving benefits, you are less likely to lose trained employees.

A WorkSharing plan can help you limit
unemployment and new hire costs and
retain your skilled employees.

However, most of your staff will have concerns about whether or not their jobs are safe or how long their income will be reduced. Depending on your work environment, open discussion may be the best way to keep morale high.

Allowing more flexibility in scheduling or use of compensated time off (for example, to allow an employee to take a course at the local community college during the slowdown or go to a three or four day week instead of five shorter days to reduce commuting or childcare costs, etc.) may also help.

WorkSharing plans are most successful in retaining staff when the employer partners with their employees to some extent to reduce apprehension, provide positive benefits from the reduced hours, and alleviate some of the effects of the pay cuts.


Notes and General Information

  • WorkSharing plans usually take 2-4 weeks to set up. Unlike a regular layoff where an individual is eligible for benefits immediately, a WorkShare plan requires some advance planning by the employer.
  • The minimum number of participants in a WorkSharing Plan is two. Smaller businesses may not be able to participate.
  • In order to set up a WorkSharing plan, you must have enough money in your state unemployment (SUTA) account to cover the expected costs. If you’re a new business that hasn’t paid enough into SUTA yet, or your company had layoffs in the past and the account’ been drawn down, you may not be able to set up a WorkSharing plan.
  • The plan is easiest to administer if participants work the same number of hours every week. If their hours fluctuate from week to week, you may find you are not ‘following’ your WorkShare plan and have to submit a new one. Keep that in mind when scheduling work for plan participants.
  • Your plan participants WILL see an income reduction, since unemployment benefits are usually only about half what their regular wages would have been. Some of your employees may be unwilling or unable to take a pay cut and seek other work, collecting full unemployment benefits in the meantime. However, you have a much better chance of keeping skilled workers and reducing unemployment costs under a WorkShare Plan than if you lay people off completely.
  • If your employees use direct deposit for their paychecks, make sure they realize their WorkShare unemployment payments are NOT direct deposited and they will need to bring those checks to the bank.
  • WorkSharing participants should continue to receive benefits based on their total hours under the plan, not just the hours they work. This means if you provide health insurance to full time staff, they should continue to receive that benefit even if their working hours under the plan are cut to half-time. This may help you retain skilled employees despite pay cuts. However, it also means your cost to provide those benefits will not go down even if people are working less hours. Plan and budget accordingly.
  • WorkShare benefits, like other unemployment benefits, are taxable income to your employees. Many people chose NOT to have payroll taxes withheld because their income is lower, but that can result in owing taxes at the end of the year. You may want to discuss this with your staff to help them avoid problems later or work out a plan with them for additional payroll withholdings once the plan ends to make up for not taking out taxes during the plan period.
  • WorkShare payments count against your state unemployment insurance (SUTA) contributions. The business WILL have a higher contribution rate following participation in a WorkSharing plan but paying back the unemployment fund will be done over a period of years (as compared to immediate payouts of severance or accrued vacation time), and you may avoid the considerable expense of hiring and training new staff once things pick up because you were able to retain your trained employees.

More information on the plan and application forms can be found at the WorkSharing Program page at the Commonwealth of Massachusetts website.


Estimate Your Current Employee Costs

Check out the Real Cost of an Employee spreadsheet calculator if you need a better understanding of the total cost of an employee and how much you would save through a WorkShare plan. Enter an employee’ information, including all their current benefits, to see what they cost right now, then change their hours but leave things like health insurance alone (they keep those benefits under a WorkShare Plan) to see how much you might save in the short-term in wages and payroll taxes.