RICHMOND — After tough questions from Republican lawmakers, a House of Delegates committee advanced a bipartisan proposal Tuesday that would allow Virginia businesses to temporarily cut workers’ hours as an alternative to layoffs and permit workers to receive unemployment compensation to partially replace lost wages.
The bill (SB 110) cleared the House Commerce and Labor Committee on a 14-5 vote, moving the bill to the full House for a final vote on passage. The Senate passed the bill by vote of 36-2 last month.
The legislation would create a voluntary “shared work” program, giving businesses the option to reduce workers’ hours by as much as 60 percent rather than lay them off during economic downturns. Supporters, including the Virginia Chamber of Commerce, say the programs benefit employers by allowing them to retain skilled workers when business is slow. Workers keep their jobs and benefits and collect a prorated share of the unemployment benefits they would have received if they had been laid off.
“It keeps them working, it keeps their benefits going, it keeps them with their retirement and their health insurance,” said Sen. Bill Stanley, R-Franklin County, a co-sponsor of the bill. “It also keeps that work force trained and skilled and still on the job instead of idled on the side.”
Stanley called the proposal a “smart bill” that could benefit businesses in regions that have been struggling with high unemployment rates. Work share programs were in place in 26 states and the District of Columbia as of November, according to the National Conference of State Legislatures.
Stanley introduced the bill along with Sen. George Barker, D-Fairfax County. They have worked for two sessions trying to get the proposal through the legislature.
“It’s commonly used in situations where there’s a downturn in the economy or a temporary reduction in demand orders for your particular product, but they expect it to return,” Barker said.
If the bill becomes law, it would take effect Jan. 1, 2015. The House Commerce and Labor Committee attached a sunset clause to the bill so that the program would expire in 2020 unless lawmakers vote to renew it. Committee members also raised questions about how the program would be funded and whether it could be abused.
The Virginia Employment Commission projects that the short-term program would increase the unemployment tax per employee by an average of 19 cents a year for businesses that choose to participate. The cost to employers that don’t participate would be less than 2 cents per employee, Barker told the committee.
Federal grant funding would cover startup costs, and the program would not affect the solvency of the unemployment trust fund.
Del. Ben Cline, R-Rockbridge County, asked if the program could be used to prop up businesses “that are not being run efficiently and not being run competitively.”
Barker noted that the money goes to workers, not employers. Stanley pointed out that the VEC would have to approve each shared work plan.
“The state is involved in the plan,” Stanley said. “It has to look at the plan, accept the plan, probably look at the viability of the company coming out of this work share program to make sure that we’re not throwing good money after bad. … The keen eye of the VEC will take care of that.”