April 10, 2020
Vermont law inactivates state's workshare program in July 2020 despite federal incentives under the CARES Act for COVID-19 relief
Recently enacted SB 108 (Act 85) provides, among other unemployment insurance (UI) provisions, that the Vermont Department of Labor will inactivate its short-time compensation program (also referred to as a work share program) as of July 1, 2020. After that time, the only way the program can resume operations is by enactment of legislation by the Vermont General Assembly or if the legislature is not in session, by Joint Fiscal Committee.
According to a U.S. Department of Labor (DOL) program letter to state workforce agencies explaining the provisions of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, the following were provided as incentives for states to maintain or implement a short-term compensation program (DOL UIPL 14-20; EY Payroll Newsflash Vol. 21, #137, 4-6-2020):
If a state enacts a new law providing for the payment of STC after March 27, 2020, reimbursements are available starting with the effective date of the state law enactment and ending with weeks of unemployment ending on or before December 31, 2020.
States without an existing STC program in the state's UC law may provide STC benefits under an agreement with the DOL and be reimbursed for 50% of STC benefit costs, with the employer paying the other half, up to a maximum of 26 weeks of STC per individual. This federal STC program is available for weeks of unemployment beginning on or after the date on which the state enters into an agreement with the Department and ending with weeks of unemployment ending on or before December 31, 2020.
A $100 million grant to be shared across states for implementation or improved administration, and promotion and enrollment of a state's STC program.
Background on Vermont's short-term compensation program
The Department's plan to make its work share program inoperable as of July 1, 2020 stems from the fact that only one employer made use of the program since 2014.
The state's UI benefit law was amended in 2014 to allow unemployed workers not covered by a work share program the ability to collect partial UI benefits. The law changed the definition of "disregarded earnings," income earned while unemployed that does not affect UI benefit eligibility from the former 30% of the worker's weekly wage to 50%. As a result, and because of the arduous application and approval process, there was less incentive for employers and employees to apply for a work share plan. (Vermont House proposed amendment to SB 108.)
Ernst & Young LLP insights
In light of the incentives now available for states to adopt short-time compensation programs and the fact that SB 108 was passed before enactment of the federal CARES Act, it is possible that further action may be taken to delay the law's effective date to accommodate the need for partial UI claims during the COVID-19 crisis.
We have contacted the Vermont Department of Labor Commissioner's office for comment and the Trade Act Program (TAA) coordinator told us that the impact of SB 108 will be further discussed with Department officials within the commissioner's office. (Telephone conversation, April 8, 2020.)
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