Q&A: Using the Shared Work Program to Cut Payroll Temporarily
The Insider recently spoke with Phyllis Weisberg, partner at Armstrong Teasdale, about New York’s Shared Work Program and how it could help ease building staff costs during the COVID-19 health crisis.
Q: What exactly is the Shared Work Program?
Weisberg: It’s a program that New York State’s Department of Labor has had for a number of years, and there are similar programs in other states. Originally, it allowed for a temporary reduction in hours to help seasonal businesses when they went through cycles and didn’t want to lay off employees. Under the program, you can reduce the hours of an employee anywhere from 20 to 60 percent of their regular hours for a period of time. Their reduction in pay is in part compensated by their eligibility for unemployment benefits.
Q: Could apartment building owners use this program to reduce building staffs, and thus operating expenses, however long the COVID crisis lasts?
Weisberg: Yes. The program wasn’t readily available to buildings that have union employees, but on April 11, the Realty Advisory Board and Local 32BJ, which represents the building employees, entered into a memorandum of agreement authorizing the use of this program to help employers save money and help employees keep their jobs. This was an outgrowth of what Congress did in the CARES Act, which encourages employers to use shared work programs in order to preserve jobs.
Q: Can you give an example of how much an owner could save using this program?
Weisberg: The monetary savings are determined by the size of the staff. Assuming the average wage is paid to a porter or a handyman, the savings could be $500 a week per employee.
During this period, the employer has to continue paying all the health and fringe benefits that are required under the union contract. Those continue to accrue to the benefit of the employee.
Congress sweetened the deal for employees, because under the CARES Act there’s a $600 bonus payment available every week until July 31, so that employees not only would be eligible for their proportionate share of unemployment, but they would also get a $600 payment. In most cases, that means employees actually make more than they would have working a 40-hour week.
Q: Let’s say I have 10 staff members ranging from supers to handymen. If I join this program for May and June, what would my savings be?
Weisberg: If you have 10 employees, you’ll get $500 a week per employee for eight weeks, which amounts to $40,000. And the employees won’t be financially hurt. Assuming their hours are cut by 50 percent, they will be entitled to 50 percent of the unemployment benefit they would get if they had been fully unemployed. They will also get the $600 payment. Based on the union scale, that ends up, certainly for porters and handymen, giving them more money than they would otherwise make.
Q: In some buildings, residents have gone elsewhere, to stay with family members outside the city. Commercial tenants have closed down. And there’s no construction going on. So owners may have less need for staff. But in other buildings, the owners may feel that they have to do a lot more work—namely, cleaning and disinfecting—and need the full staff.
Weisberg: Yes, it’s a balancing act that each owner has to consider.
Q: If an owner decides to participate in the program, how does the application process work?
Weisberg: The employer has to file an online application with the Department of Labor. It’s a two-page, very simple application. The employer also has to file a list of the employees who will be involved. You can break your staff into units, so the program doesn’t have to apply to all your staff. For example, maybe it’s only your doormen where you’re overstaffed. You can keep your super and handymen, and only have the program apply to your door staff.
I’ve been told the online application process isn’t difficult, and there’s help readily available on the phone. After filing, you also have to provide a copy of the application to the union. The Department of Labor will take a few days to a week to approve the plan. Again, you have to let the union know about the approval. Once you’re approved, you can put the plan in operation.
Q: And at the same time, the employees have to file for unemployment benefits, correct?
Weisberg: Yes. They have to register, and they can do that while the plan is pending approval. The plan has to be certified every week by the employer, and the employees have to certify every week how many hours they worked, etc. It’s a one-page, relatively simple certification. The employees can file online, and they can get direct deposit. New York administers both the traditional unemployment portion of the payment and the $600 under the CARES Act.
Editor’s Note: For more information on building workers’ benefits during the COVID crisis, see our May feature, “How New Emergency Paid Leave Benefits Apply to Building Service Workers,” available to subscribers here.