CA EDD Workshare Program

Employees participating in the Work Sharing program, if eligible, will receive the percentage of their weekly Unemployment Insurance benefit amount.

This means that employees are paid a partial unemployment benefit, the employer keeps the employee on at reduced time and wages, effectively preventing the need for a layoff.

To participate, companies must have at least 10% of the company's workforce & a minimum of 2 employees must have hours and wages reduced by between 10% and 60%.

If you are an employer considering participating in CA EDD Workshare, watch the video below:

 

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The answer is no; Employers are charged for Work Sharing Unemployment Insurance (UI) benefits the same way as regular UI benefits. The rate paid will rise commensurate to the number of employees enrolled in the Workshare program.  The more employees who participate, the larger the increase in the employers UI rate will be.  The rate increase does not take effect immediately.

Is your company legally registered to do business in California? You must be legally registered in CA to participate in the CA EDD Workshare program. Are you a foreign corporation that conducts business in California but is not registered with the Secretary of State? If so, you could consider registering with the CA Secretary of State to legally operate in California, though, by doing so, you may trigger other obligations such as sales tax and payroll tax issues.

Is an employer charged for Work Sharing? Answer: Yes.  Employers are charged for Work Sharing Unemployment Insurance (UI) benefits the same way as regular UI benefits.

Can an Officer/Owner of a corporation participate in the California EDD Work Share Program? No.  Corporate officers or major stock holders with investment in the company may not participate in the Work Sharing program. If you are the only employee in your company (i.e. you are a single shareholder and have no other employees), although you are legally required to pay yourself wages under Federal and California State law, you may not participate in the Workshare program. Additionally, leased or temporary service employees may not participate in the Work Sharing program.

By participating in the Workshare program, am I at higher risk for an EDD audit? If your prior 1099 contractors now are claiming they are truly employees and are filing for unemployment with EDD. Yes!  This is the greatest risk a company runs fro an EDD audit.  If a former worker, of any classification, files for Unemployment Insurance and lists you as the most recent employer, EDD begins a cursory inquiry.  If that worker was, in fact, a W-2 employee, then the claim goes through, your UI rates go up and the worker gets their UI money.  If, however, that worker was classified as a 1099 by your company and they file for UI, either intentionally or unknowingly, EDD WILL AUDIT. Additionally, there is a risk is for workers who were prior 1099s that are now being classified as employees. With AB5, many businesses converted their independent contractors to employees for fear of being audited by EDD due to AB5’s new more strict requirements.  Companies who now apply for the Workshare program, may be scrutinized by EDD  because when a company participates in Workshare, EDD has total access to all employment records, both current and historical, and can compare a company’s 1099 contractors to existing employees.

If our company issued a 1099 and a W2 to the same worker can we participate in the Workshare Program? Yes.  As long as the worker is currently classified as a W-2 employee, that worker can participate in the CA EDD Workshare program. However, classifying the same worker both as an independent contractor and an employee can lead to an EDD audit.  EDD generally requires workers to be classified either as a 1099 contractor (if substantiated by AB5 and the prior 13 factor test) or as an employee.  Having both classifications for the same worker can lead to an EDD audit, especially where the worker is being paid both ways for the same service.  If you apply for the Workshare program, you can only claim the amount of compensation paid to a specific worker as W2 wages and not include the 1099 payment amount within the total compensation.

For a complete overview of the CA EDD Worshare rules and restrictions click here: https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm