HARRISBURG - Businesses and employees will be able to negotiate work-sharing programs to avoid layoffs and control unemployment compensation costs under changes to Pennsylvania's unemployment compensation system.
The measure signed Friday by Gov. Tom Corbett continues extended jobless benefits for thousands of Pennsylvanians and implements cost savings to help pull the Unemployment Compensation Trust Fund out of the red.
With the work-sharing program, Pennsylvania joins 21 other states that have put these mechanisms in place to potentially spread the pain of economic hard times among the work force.
Basically, the law allows employers and employees to voluntarily develop plans to avoid layoffs by reducing the hours worked by employees "across the board" who would in turn receive pro-rated unemployment compensation benefits for those lost hours.
Employers could reduce normal weekly hours by 20 to 40 percent under a plan. The affected employees would be eligible to receive unemployment compensation benefits in proportion to the reduction in hours.
"It's another tool for a company to use while we continue to have a downturn in the economy," said Sen. John Gordner, R-27, Berwick, sponsor of the law.
While it's too early to say how many work-sharing programs will come into existence, Gordner said a company that sees its business fluctuate depending on what contracts it lands is a good candidate to try this approach.
The new law puts some parameters on work-sharing programs. Employers and employees are left to negotiate a plan, but it will need approval from the state Department of Labor and Industry to take effect.
Employers must agree not to lay off employees during the term of the plan and not hire or transfer new workers to the affected work unit. In a unionized shop, the plan would have to be approved in writing by a collective bargaining representative.
The concept of work sharing or short-time compensation programs dates to the 1980s when a federal law encouraged their use by the states. Supporters say it saves jobs and enables employers to keep trained and skilled workers.
The then Democratic-controlled House approved a work-sharing bill last year and a GOP senator last amended it into the unemployment compensation bill last month.
"It is something that certainly labor was supportive of and the chamber was accepting of," Gordner said.