ETA issues guidance on Short-Term Compensation programs under CARES Act
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Wednesday, May 20, 2020

ETA issues guidance on Short-Term Compensation programs under CARES Act

By Payroll and Entitlements Editorial Staff

On May 5, the Department of Labor released new guidance on Title II, Subtitle A of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, concerning 100-percent federal reimbursement for certain state Short-Term Compensation (STC) payments, as well as other changes to STC programs. The guidance is in Unemployment Insurance Program Letter 20-21, dated May 3, 2020.

STC program. Also known as the "work-sharing" or "shared work" program, STC is a layoff aversion program in which an employer, under a state-approved plan, reduces a group of workers’ hours. These workers in turn receive a reduced unemployment benefit payment. The program is important because it preserves employees’ jobs and employers’ workforces during disruption to regular business activity by reducing hours of work for an entire group of affected employees, rather than laying off some employees while others continue to work full time.

Reopening after pandemic shutdown. "In the context of re-opening businesses closed temporarily by a pandemic, STC can also serve as a means of bringing most or all of a temporarily laid-off workforce back to the job, even if social-distancing measures, a decline in business, or other factors prevent operating at full staffing levels full time," according to the guidance. "Specifically, this benefit may be made available to individuals returning to work with reduced hours who worked for the employer prior to the temporary lay-off due to COVID-19."

CARES Act support. The guidance addresses relief provided in the CARES Act:

  • Section 2108 provides for temporary 100-percent federal financing of STC payments in a state with an STC program, whether that program is new or pre-existing;
  • Section 2108 provides for temporary 100-percent federal financing of STC payments in a state with an STC program, whether that program is new or pre-existing;
  • Section 2110 provides $100 million in grants to support states in implementing and administering STC programs; and
  • Section 2111 provides that the DOL will give technical assistance and guidance to states implementing STC programs.

"One of the Department’s main objectives is to help keep workers connected to their jobs when possible," Assistant Secretary for Employment and Training John Pallasch said in a statement. "Today’s guidance provides clarity on how states can take advantage of this program as they look to re-open their businesses. Short-Term Compensation is one of many tools that employers can use to retain connection with their employees, ease the financial impact of the crisis on their employees, and to be ready to reengage quickly as business restarts" (UIPL 21-20, May 3, 2020).

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