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.

About the Author
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.