U.S. Department of Labor Issues Additional Guidance About Short-Time Compensation Program Provisions

WASHINGTON, DC – The U.S. Department of Labor today issued additional guidance regarding Title II, Subtitle A of the Coronavirus Aid, Relief and Economic Security (CARES) Act. This guidance concerns 100 percent federal reimbursement of certain state Short-Term Compensation (STC) payments, as well as other changes to STC programs.

“One of the Department’s main objectives is to help keep workers connected to their jobs when possible. Today’s guidance provides clarity on how states can take advantage of this program as they look to re-open their businesses,” said Assistant Secretary for Employment and Training John Pallasch. “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.”

The STC program, also known as “work-sharing” or “shared work,” is a layoff aversion program in which an employer, under a state-approved plan, reduces the hours for a group of workers. These workers in turn receive a reduced unemployment benefit payment. This important program 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.  

Section 2108 of the CARES Act provides for temporary 100 percent federal financing of STC payments in a state with a STC program, whether that program is new or pre-existing. Section 2109 provides for a state without a qualifying STC program to enter into an agreement with the Secretary of Labor to operate a temporary federal STC program. Section 2110 provides $100 million in grants to support states in implementing and administering STC programs. Section 2111 provides that the department will give technical assistance and guidance to states implementing STC programs.

The mission of the department is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.