The Voluntary Shared Work Program (VSW) is Iowa's version of Short Term Compensation (STC).
The VSW program is intended for use as an alternative to layoffs and has been an effective tool for Iowa businesses experiencing a decline in regular business activity. Under VSW, work reductions are shared by reducing employees’ work hours and Unemployment Insurance (UI) partially replaces lost earnings. By avoiding layoffs, employees stay connected to their jobs and employers maintain their skilled workforce for when business improves.
VSW Program vs. Unemployment Insurance
Currently, laid off employees can receive UI benefits for up to 26 weeks at a maximum of $548.00 per week. This amount is charged against an employer’s UI tax account. With the VSW program, employees receive a fraction of regular UI benefits which is equal to the percent of their work hour reduction.
The employer sets the duration of the plan (with agency approval), along with the percent of the full weekly UI benefit payment the employee receives. Workers can receive a portion of their UI benefits even if hours are reduced by as little as 20 percent.
With VSW, employers can:
- maintain productivity and quality levels (because the same experienced employees are doing the same work)
- keep the ability to expand operations quickly when business conditions improve
- reduce training costs by keeping the workforce intact
- avoid costs related to hiring and reassignments
- avoid transfers, demotions and tenure based layoffs
With VSW, employees can:
- keep job skills sharp
- maintain a higher family income than with UI benefits alone
- keep health insurance and retirement benefits
- continue building job tenure
To participate in VSW, the employer must submit a Voluntary Shared Work Plan Application that:
- provides an estimate of the number of layoffs that would occur without VSW
- lists the percent of reduction in affected employees’ work hours (must be between 20 percent and 50 percent and be the same for all affected employees)
- certify that the reduction in hours is in lieu of layoffs
- includes written approval from the affected employees’ collective bargaining representative (if applicable)
A VSW plan must affect at least five employees. VSW cannot be used for seasonal work reductions. A participating employer’s quarterly UI reports must be current and UI taxes paid in full.
To be eligible to participate in VSW, affected employees must:
- qualify for UI benefits
- not have an existing UI claim in another state
- be able and available to work their regular hours of work for the VSW employer
Instructions for Enrollment of Employees and Reporting Procedures
Following approval of VSW, the employer will complete an excel spreadsheet to enroll the employees into the program. Most of the information needed can be transferred from payroll records. Employees will need to complete the VSW Data Collection form and Tax Withholding Agreement form. These forms are used to determine the number of dependents, method of payment and desired tax withholding which will be of assistance when completing the spreadsheet. The spreadsheet should be submitted no later than Wednesday of the first week that the employees will be active in the program. If the employer has been approved to backdate the application, then it should be sent in as soon as it is ready. Employees cannot be paid until they have been enrolled in the program. UI payments are deposited to a state issued debit card unless an Agreement For Direct Deposit form is submitted.
Each week that the VSW plan is in operation, the employer will submit the number of hours that each employee enrolled in the program has worked. Regardless of the company pay period, the employer will report for weeks that run from Sunday through Saturday. For example, if the employer had enrolled in the program effective Sunday, October 5, 2014, the workers' hours for the period of October 5th through October 11th would have been submitted on Monday, October 13th. This would have allowed employees to receive their first benefit payment by Friday, October 17th.
Hours worked by employees are submitted using an excel spreadsheet, in one column with a single data line for each employee (see instructions).
Call or send an email to the VSW coordinator at email@example.com if:
hours for an employee were under or over reported (include the employee's name, last 4 digits of the social security number, the week and the corrected number of hours in the email)
changes need to be made after the program has started, such as putting employees on indefinite layoff, adding more units to the program or adding exempt employees
employees participating in the VSW program are discharged or quit (include the employee name to be removed from the VSW program, the date and reason for separation and the completed Notice of Separation or Refusal of Work web form)
Cost of the Program
UI benefit payments for the VSW program are charged to employer accounts in exactly the same way. Employers should be aware that, just as when laid off employees collect regular UI, use of the VSW program may affect the employer’s UI tax rate.