Short-Time Compensation (STC) (formally Voluntary Shared Work (VSW) Program) is a program intended for use as an alternative to layoffs and has been found to be an effective tool for Iowa businesses experiencing a decline in regular business activity.
Under STC, 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.
Employers should review Iowa Code Section 96.40 prior to completing the application for the STC program to determine if this program will fit the employer’s needs.
STC Program vs. Unemployment Insurance
Currently, laid off employees can receive UI benefits for up to 16 weeks at the determined maximum weekly benefit amount. This amount is charged against an employer’s UI tax account. With the STC 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.
More on the STC Program
With the STC program, 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 STC, 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 STC, the employer must submit a Short-Time Compensation Plan Application on the employer portal in iowaworks.gov. This application:
Provides an estimate of the number of layoffs that would occur without STC.
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).
Ensures that employees' work hours based on a workweek that does not exceed 40 hours.
Certifies that the reduction in hours is in lieu of layoffs.
Includes written approval in your STC application from the affected employees’ collective bargaining representative (if applicable).
A STC plan must affect at least five employees. STC 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 STC , 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 STC employer.
Log into iowaworks.gov and follow the prompts on the STC application to enter required information for each employee in the participating units. This will need to be entered prior to the plan being reviewed by IWD to determine if employer is eligible for the plan.
Once reviewed, IWD will notify the employer of the decision. After a plan is approved IWD will notify the employer of the date for the participating employees to file their initial claim in iowaworks.gov. The employee will be responsible to complete this timely in order for the plan to continue.
All participants must file their initial claim before the employer is allowed to file the weekly claim on iowaworks.gov.
The employer will be responsible each week to submit the weekly claims during the STC duration. Regardless of the company pay period, the employer will report for weeks that run from Sunday through Saturday.
Once a contract begins (always a Sunday date), the weekly claims are to be submitted each week that the worker works reduced hours. These weekly claims should be submitted the week following the week of reduced hours.
For example, a worker works Monday through Friday but only works 24 hours instead of the regularly scheduled 40 hours. This weekly claim would be submitted the following week, preferably on Monday so that all hours worked will be completed (Sunday-Saturday of the week prior).
Most generally all weekly claims submitted on Mondays will pay to the worker’s debit card or bank account, depending on which method they provided, the following Thursday for debit card or Friday for bank account, unless there is a holiday.
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 STC program are discharged or quit (include the employee name to be removed from the STC program, the date and reason for separation, and the completed Notice of Separation or Refusal of Work form.
To do this, log into the employer portal on IowaWORKSand fill out the Separation Notice Alleging Disqualification form located under the Unemployment Services for Employers section.
All general questions regarding STC can also be sent to the email address listed above.
UI benefit payments for the STC 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 STC program may affect the employer’s UI tax rate.
Should you have any questions about the Short-Time Compensation (STC) program, please contact Iowa Workforce Development at 866-239-0843, or email at stcclaims@iwd.iowa.gov
