Employment and Training Administration
Washington, D. C. 20210






July 29, 1983




September 30, 1985











for Regional Management




Model Legislative Language to Implement a Short-Time (Work Sharing) Compensation Program and Recommended Improvements in State Provisions for Partial Unemployment Benefits


  1. Purpose. To assist States in developing appropriate legislative language to implement a short-time compensation (also known as "shared work" or "work sharing") program by providing model draft legislation for this purpose and to provide alternatives to encourage individuals to accept part-time employment.

  2. References. Section 194 of P.L. 97-248 and pages C-34 to C-49, Manual of State Employment Security Legislation, 1950.

  3. Background. Under the provisions of Section 194 of P.L. 97-248 which was enacted on September 3, 1982, the
    Secretary of Labor is directed to "develop model legislative language which may be used by States in developing and enacting short-time compensation programs."  As a means of assuring minimum uniformity throughout the States, the Congress has specified certain guidelines for these programs which it encourages States to utilize in carrying out the intent and purpose of Section 194.  That purpose as stated in Section 194(b)(4) is to encourage States to experiment in the implementation of a short-time compensation program.

    Section 194 is an experimental provision which is in effect for the three-year period beginning on September 4, 1982.  At the conclusion of that period, the guidelines provided for the short-time compensation program are terminated.

    A provision has also been included in section 194 which requires that the Secretary conduct a study of State short-time compensation programs.  This study is to be undertaken through consultation with employee and employer representatives, and has as its purpose the development of criteria and guidelines necessary to measure a number of specified factors that are designed to measure the impact of the program.  The Secretary is required to submit a final report on the implementation of Section 194 not later than October 1, 1985.  That report is to contain an evaluation of the short-time compensation programs and such recommendations pertaining thereto as the Secretary deems advisable.

  4. Purpose of Short-Time Compensation Programs. The intent of short-time compensation programs is to preserve the employees jobs and the employer's work force during times of lowered economic activity by reducing hours of work for all employees affected rather than by laying off some while others continue to work full-time.  In this way the short-time compensation program seeks to cushion the adverse effect of the reduction in business activity on the worker by providing benefits for the portion of the normal work week that has been curtailed.

  5. Modifications Needed in State UI Laws. It is recognized that under existing State partial benefit formulas or definitions of weeks of unemployment, individuals working reduced hours to the extent required under short-time compensation programs may not be entitled to benefits for partial unemployment or be considered unemployed because their earnings are too high.  Since short-time compensation plans are designed to provide benefits for each week of reduced hours irrespective of the partial benefit formula or the amount of earnings or hours worked in a short-time week, changes are necessary in the partial benefit provision of State laws and definitions of weeks of unemployment in order to properly implement these programs.  Additionally, the usual availability and actively seeking work requirements must also be modified to minimize obstacles to work force maintenance and benefit entitlement.  Other modifications that may be necessary in State law provisions must be done in a manner that assures consistency with applicable Federal law requirement in the Federal Unemployment Tax Act and the Social Security Act.

    Draft Language for a State short-time compensation program and commentary on the suggested provisions are attached.

    Additional information will be provided later in a Reports and Analysis Letter.  This letter will concern reporting instructions that will be applicable to a State adopting a short-time compensation program.

  6. Partial Benefits. As an alternative to or as a complement to the model work sharing program, a State may wish to consider revising its formula for paying benefits for partial or part-total unemployment.  In order to achieve the objectives of the partial benefit provisions in the State law, the earnings limit in the definition of "week of unemployment" or of "partial unemployment" and "part-total unemployment" should be set high enough to give a partially unemployed individual a realistic incentive to work as much as possible, but not so high as to result in total income (benefits plus earnings) that virtually reaches his/her wages for full-time work.  Attachment III describes several approaches that may be taken to encourage the unemployed to accept part-time employment.

  7. Action Required. SESAs are requested to:

    1. Review the attached model legislative language and commentary, and are encouraged to seek enactment of appropriate legislation enabling them to implement a short-time compensation program in accordance with the guidelines contained in the model legislation.

    2. Review and, where appropriate, improve their benefit formulas for partial and part-total unemployment.

  8. Inquiries. Inquiries should be directed to yor regional office.

  9. Attachments. 

    1. Draft Language and Commentary To Implement a Short-Time Compensation Program.

    2. Text of Provisions on Short-Time Compensation As Set Forth in P.L. 97-248.

    3. Benefits for Partial Unemployment.