What the Gov: Will Illinois Implement Program Aimed at Avoiding Layoffs Amid COVID-19?

The federal government is offering funds to states with programs that encourage employers to temporarily cut staff hours instead of resorting to layoffs. But the agency charged with launching the program in Illinois says the state likely won’t be able to take advantage of a major piece of that support.

Justin German/BGA

This article is part of a series called What the Gov, where the BGA takes reader questions and tracks down the answers. We are devoting resources to covering how local and state governments are responding to the coronavirus outbreak. We are committed to reporting on what you want to know. Ask your questions here.

The COVID-19 outbreak has led to record-high unemployment in Illinois and the federal relief package contains a partial solution that could help ease the strain on employers and employees alike.

But Illinois hasn’t moved forward with plans to make use of that support, something readers have noticed too.

“Why doesn’t Illinois participate in the work sharing program?” a reader asked us, referring to a federally authorized program that encourages employers to temporarily reduce the hours employees work during economic downturns instead of laying them off.

Workshare — or “short-time compensation” — programs allow employers to keep staff on the payroll part-time, with workers retaining health and retirement benefits while collecting prorated unemployment benefits to help make up for their reduced hours. Twenty-seven states have a workshare program on the books, according to the U.S. Department of Labor.

That list technically includes Illinois, which has a statute providing for one. Passed with support from labor and business groups, it was signed into law in late 2014 by former Gov. Pat Quinn. But the program was never implemented by the Illinois Department of Employment Security under Quinn’s successor, Gov. Bruce Rauner. And Gov. J.B. Pritzker’s administration hasn’t moved forward with it either, even as some states are looking to launch programs or overseeing expansions of existing ones since the coronavirus outbreak began.

A spokesperson with IDES told the Better Government Association the agency is “in the early stages of beginning the process to search for and hire a program manager for this project” and is looking to have the program up and running within the next two years.

IDES spokeswoman Rebecca Cisco said it could take one year for the state to secure federal funding available through 2023 to help implement the workshare program. In addition to hiring the program manager, the agency also needs to find a vendor to administer it. After that, she said, IDES anticipates it will take another year to get the program up-and-running on “a general, conservative timeline.”

That means Illinois likely won’t be able to take advantage of an offer under the federal CARES Act to reimburse states for workshare program payouts, Cisco confirmed.

Under that legislation, the federal government will fully reimburse states with workshare programs for compensation benefits through December 31, 2020. Even states without existing programs can benefit, with the federal government offering to chip in at half that rate if they agree to participate temporarily.

According to an April report from the Illinois Economic Policy Institute and the University of Illinois Project for Middle Class Renewal, implementing and promoting the state’s workshare program could save up to 124,000 jobs in Illinois, increase worker income, reduce turnover costs for businesses and save state government up to $1.1 billion in unemployment insurance costs this year alone.

Leaders in business and labor continue to support the program, and the state lawmaker who sponsored the plan that created it has put forward a resolution calling on IDES to act.

Illinois Sen. Steve Stadelman of Caledonia told us he wants to know why Illinois can’t tap into the partial reimbursement for short-time compensation available to states that don’t already have workshare programs.

“There’s an apparent lack of urgency with IDES to move ahead with this program,” he said. “It’s been hard to get answers.”

We asked Cisco why the process for launching workshare is projected to take so much longer than it took Illinois to institute a program for independent contractors to apply for unemployment insurance.

“It’s not an add-on to the current system,” Cisco said. “It would be a completely new system that would have to be built.”