Short Time Compensation for Employers

Short Time Compensation for Employers
PO Drawer 5350
Tallahassee, FL 32314-5350
Phone (850) 921-3253
Fax (850) 921-3427
E-mail Audrey Martin , STC Coordinator

Application Form

Preface

Short Time Compensation (STC) is a temporary alternative work style that will assist employers in keeping their work force intact.
Short Time Compensation resulted from a 1983 Legislative amendment to the Unemployment Compensation Law and is provided for in Section 443.1116, Florida Statutes. The program permits prorated unemployment compensation benefits to employees whose work hours and earnings are reduced as part of an STC plan to avoid total layoff of some employees. The program encourages work sharing as an alternative to layoff and eases the financial burden of unemployment.

Employees retained during a temporary slowdown are able to quickly resume high production levels when business conditions improve. Employers are spared the expense of recruiting, hiring, and training new workers. In turn, the employees are spared the hardships of full unemployment. Employers who must permanently reduce their work force may use the program as a transition to layoff. Affected employees may continue to work at reduced levels with an opportunity to find other employment before the expected layoff.

How Does STC Work for the Employer?

A firm that faces a 20% reduction in production may lay off one-fifth of its work force. By reducing hours instead of the size of its workforce, a company could retain its total work force. For example, reducing the work schedule from a five-day workweek to a 4-day workweek could cut costs without reducing the number of employees. Employees would receive wages based on four days of work and partial unemployment compensation benefits.

How Does STC Work for the Employee?

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 and salary were reduced would receive pay for the hours worked and an unemployment compensation benefit based on the percentage of the reduction in hours. For example, a worker whose hours were cut by 20% in lieu of lay-off would receive pay for the 32 hours worked at $7.50 per hour, or $240. A 20% reduction of the $150 weekly benefit amount would equal $30 in weekly STC benefits. The employee would thus receive net pay from the employer plus a $30 STC benefit for the week.

Basic Requirements

  • Reduced hours must be used as a temporary solution to avoid a temporary layoff.
  • The employer must submit a Short Time Compensation plan application to the STC Coordinator, Unemployment Compensation Services.
  • Participating employees must be full-time (at least 32 hours per week prior to STC reduction), permanent employees (not seasonal) and the employees must have a set number of hours (excluding overtime) that they work each week in order to participate. Employees paid piece rate or on commission or who are hired to do certain jobs regardless of the time required are not eligible for participation.
  • STC benefits are payable when normal hours of work are reduced from 10-40%. If normal work hours exceed 40, the percentage will be based on 40 hours.
  • Each week that STC benefits are claimed, at least 10% of the employees from the total staff or within a particular unit must be working reduced hours. (Two employees is the minimum for a staff or unit of less than 20 employees.)

Questions and Answers about Short Time Compensation

Q. Who may participate in STC?

A. Any employer seeking an alternative to temporary layoffs when a decline in production, services or other conditions result in a need to reduce the workforce>

Q. How does an employer participate in STC?

A. Complete and submit an STC Plan Application to the STC Coordinator in Tallahassee.

  • If approved, the plan can be implemented as early as the week AFTER the STC Coordinator receives the application. If not approved, the employer will receive written notification.
  • If collective bargaining agreements cover the employees, each union bargaining agent must sign the application indicating agreement of the proposed plan.

Q. What is the employer's role in the administration of this program?

A. The employer becomes a representative for the participating employee and is responsible for ensuring that the "EMPLOYEE INITIAL APPLICATION FOR SHORT TIME COMPENSATION" and "WEEKLY CLAIM CERTIFICATION" (sent biweekly) are properly completed and returned to the STC Coordinator in Tallahassee. The employer is also responsible for providing the STC Coordinator with the number of hours each participant worked each week as well as attesting to whether the participant worked or was paid for all available hours. If additional information is needed from a participant in order to process a claim, a request will be sent to the employer and the employer will provide the necessary information to the STC Coordinator.

Q. How far in advance can an STC Plan Application be submitted?

A. The STC Plan Application may be submitted two weeks prior to the date that reduced hours are due to begin.

Q. How flexible is STC? Can STC be applied to most work situations?

A. The Short Time Compensation Program is very flexible.

  • Employees may be added any time during the plan year by contacting the STC Coordinator in Tallahassee. The employees must have worked at least one normal full-time week and be considered permanent full-time employees.
  • Employees may be rotated on and off the plan or to different departments as long as 10% of the employees in the unit, work location, division or entire staff are working reduced hours each week.

Q. What is the duration of a Short Time Compensation Plan claim? Can an STC Plan be renewed at the end of the plan year?

A. An STC Plan is effective for one year and an unemployment claim is effective for one year. A participant may receive a maximum of 26 weeks of STC benefits during the unemployment claim year. A plan may be renewed after the year is over, provided the employees returned to full-time work at some time during the year.

Q. Must 26 weeks be claimed consecutively?

A. No. The only restriction is that at least 10% of the employees in the work force, or unit within the work force, must share in the work reduction each week in order for the employees on reduced hours to be paid.

Q. How does participation in STC affect the employer's tax rate?

A. STC benefits are charged to the STC employer's tax account in the same manner as regular unemployment benefits. However, the maximum tax rate is 1% higher for STC employers than for non-STC employers. The tax rate is determined by the employer's benefit ratio as well as other factors. This does not mean the tax rate will automatically rise to 6.4%.

Q. How does participation in STC affect reimbursable employers?

A. Reimbursable employers are billed for their share of any benefits paid.

Q. Can salaried employees participate in the STC Program?

A. The STC portion of the Unemployment Compensation Law does not prohibit salaried employees from participating in STC. However, the Federal Department of Labor, Wage and Hour Division, should be contacted to discuss participation of exempt salaried employees.

Q. What happens if during the STC Plan Year some or all STC participating employees must be temporarily laid off or have their hours reduced by more than 40% during a work week.

A. If the lay off or reduction greater than 40% lasts less than one month and earnings are less than the employee's weekly benefit amount, the employee may be paid full or partial unemployment benefits by reporting total earnings on a Weekly Claim Certification card.

Q. How do employees qualify for STC?

A. Employees must be regularly employed by the STC employer. Each employee's name must be submitted by the STC employer as a participant in the STC Plan. Each participant who meets all monetary and non-monetary qualifications for unemployment compensation claim will be approved for payment of STC benefits.

Monetary qualifications for an unemployment claim include wages in two or more calendar quarters of the base period and total base period wages equal to or more than one and one-half times the high quarter wages, but not less than $3400.00.

Non-monetary issues that may affect eligibility to receive unemployment compensation benefits include, among others, the reason for separation from a prior job, retirement income, work authorization status of non US citizens.

The STC Coordinator will supply forms to the employer that each employee must complete to establish an unemployment claim. Upon receipt of the completed forms, claims will be established and any issues resolved by the STC Coordinator in Tallahassee.
Employees must work or receive paid leave for all scheduled hours of work with the STC employer to receive STC benefits for a week of reduced hours.

Q. What is the maximum compensation for reduced earnings?

A. The employees may receive as much as 50% of missing wages, but the STC benefit is calculated using the Weekly Benefit Amount established on the unemployment claim and the percentage of reduction in work hours.

Q. If an employee used part or all of the 26 weeks of STC benefits and was then laid off totally, would the employee still be entitled to some unemployment benefits?

A. An employee may claim the credits remaining in the unemployment claim, paid at the full weekly benefit amount, until all available credits are exhausted or the claim year ends.

Q. Are Federal Income Taxes or Social Security Taxes withheld from STC benefits? Are STC benefits taxable income?

A. Social Security taxes are not withheld from STC or UC benefits. The employee may choose to have Federal Income Tax deducted from unemployment compensation benefits.

Each January, Form 1099-G, Statement of Unemployment Compensation Payments Issued, is mailed to each individual who received benefits during the preceding calendar year. The 1099-G shows the amount of benefits issued during the year. This amount must be reported as income on each person's Federal Income Tax Return.