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While reducing employees hours can reduce payroll, it might increase your unemployment insurance payments too!

Cutting employees’ hours may seem like an easy way to reduce costs, but if you didn’t think employees could collect unemployment for that, you might be in for a (not-so-good) surprise.

It seems like a simple way to avoid having to lay good employees off, and over the past few years many employers have turned to this popular alternative. While not necessarily ideal, for many organizations reducing employees’ hours has been a more palatable option and has allowed them to keep their best workers on staff.

But what many employers don’t realize right away is that reducing hours may not yield the anticipated savings.

Why?

When an employer reduces an employee’s hours as a result of the organization’s needs, the employee could be eligible to collect partial unemployment benefits for the loss in wages. And the state will include this in the chargeback liability attributed to the organization.

If you think reducing hours is still a quick and easy way to cut costs without laying anyone off, consider this. An employee is still eligible to collect partial unemployment benefits when:

  • They are “underemployed” i.e. working part time through no fault of their own
  • They are ready, willing and able to work full time
  • They have met the state’s minimum earnings or hours worked requirements

That’s why it’s incredibly important for nonprofit employers to carefully weigh the consequences of reducing hours, laying off employees, and/or using contractors before making any decisions about staffing changes. Often surprise charges can crop up when changes are made, so you will want to know what effect the unemployment claim charges may have on your organization’s benefit claims.

If you want to discuss how different staffing changes could affect your claims experience, you may want to look into membership in the Unemployment Services Trust (UST). 501(c)(3)s with 10 or more employees can find out if they qualify for membership, and receive the help of UST’s expert claims administrator to determine the impact of all staffing changes before actions are taken. It’s been proven that using an unemployment claim administrator helps save an average 15% annually on costs! Call a UST expert at 1-888-249-4788 to learn more about membership.

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04/19/12 10:11 PM

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Privacy Policy

Privacy Policy and Terms of Use

UST maintains a secure site. This means that information we obtain from you in the process of enrolling is protected and cannot be viewed by others. Information about your agency is provided to our various service providers once you enroll in UST for the purpose of providing you with the best possible service. Your information will never be sold or rented to other entities that are not affiliated with UST. Agencies that are actively enrolled in UST are listed for review by other agencies, UST’s sponsors and potential participants, but no information specific to your agency can be reviewed by anyone not affiliated with UST and not otherwise engaged in providing services to you except as required by law or valid legal process.

Your use of this site and the provision of basic information constitute your consent for UST to use the information supplied.

UST may collect generic information about overall website traffic, and use other analytical information and tools to help us improve our website and provide the best possible information and service. As you browse UST’s website, cookies may also be placed on your computer so that we can better understand what information our visitors are most interested in, and to help direct you to other relevant information. These cookies do not collect personal information such as your name, email, postal address or phone number. To opt out of some of these cookies, click here. If you are a Twitter user, and prefer not to have Twitter ad content tailored to you, learn more here.

Further, our website may contain links to other sites. Anytime you connect to another website, their respective privacy policy will apply and UST is not responsible for the privacy practices of others.

This Privacy Policy and the Terms of Use for our site is subject to change.