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July 08, 2011
The Layoff Prevention Act of 2011 Introduced

Congresswoman Rosa L. DeLauro (CT-3) and Senator Jack Reed (D-RI) have introduced legislation to reform the unemployment insurance (UI) system. The Layoff Prevention Act of 2011 encourages short-time compensation, also known as work-sharing, which allows employers to avoid layoffs by reduce their workers’ weekly hours and pay.

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Employees who participate in the program would receive a portion of UI benefits to make up for lost wages.

In a press release, Senator Reed said the act will allow companies to remain competitive by lowering costs and keeping a skilled work force, as well as benefit employees by allowing them to keep their jobs and health benefits.

“With fewer workers unemployed, there is less of a burden on the Unemployment Insurance (UI) benefits system,” notes Congresswoman DeLauro.

There are currently 23 states in the United States that have similar programs.

Here are the specific provisions of the Layoff Prevention Act of 2011, presented by DeLauro and Reed:

Offers Temporary Federal Financing
States with approved work sharing programs receive federal financing for 100% of work sharing benefits paid to workers. This financing program is available for up to 3 years.

States with existing work sharing programs automatically receive 100% financing for 2 years and are eligible for a 3rd year once their program is approved.

States without work sharing programs can take advantage of a federal program that would provide employers with access to work sharing and states with federal financing for 50% of work sharing benefits. This financing is available for 2 years.

Provides Additional Incentives
States with approved work sharing programs are eligible for grants for implementation and improved administration and larger grants for promotion and program enrollment efforts.

Contains Limitations Focused on Long-term Employment
Employers cannot participate if their workforce is employed on a seasonal or temporary basis.

Enhances Work Sharing
Requires the Department of Labor to:

  1. update model legislative language to help states develop and enact work sharing programs;
  2. consult with employers, states, and others to improve the administration of work sharing;
  3. provide technical assistance and guidance to states; and
  4. survey states and employers to determine challenges to enacting work sharing.

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