LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6868 NOTE PREPARED: Dec 31, 2021
BILL NUMBER: HB 1215 BILL AMENDED:
SUBJECT: Work Sharing Unemployment Insurance Program.
FIRST AUTHOR: Rep. Hatfield BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
XFEDERAL
Summary of Legislation: The bill establishes a work sharing unemployment insurance program. It requires
an employer that desires to participate in the program to submit a work sharing plan for approval by the
Commissioner of the Department of Workforce Development. The bill establishes the work sharing benefit
as equal to an affected employee's unemployment benefit reduced by a percentage equal to the percentage
of the employee's normal weekly work hours that the employee works under the approved work sharing plan.
Effective Date: July 1, 2022.
Explanation of State Expenditures: Department of Workforce Development: DWD estimates that the cost
to implement a work sharing unemployment insurance program would result in about $2.5 M in costs for the
first year of implementation. This includes $1.5 M due to changes to the computer system, and $1 M for
staffing costs. DWD estimates ongoing staffing costs to administer the program would total $1 M annually.
The additional funds and resources required could be supplied through existing staff and resources currently
being used in another program or with new appropriations. Ultimately, the source of funds and resources
required to satisfy the requirements of this bill will depend on legislative and administrative actions.
The bill meets the federal requirements for a short-time compensation (STC) program, making the program
eligible for federal administrative grants made available in the CARES Act. The state would be eligible for
$2,048,726 in federal grants, of which, one-third, $682,909, could be used for implementation or improved
administration of the STC program, and two-thirds, $1,365,817 for promotion of the STC program and
enrollment of employers in the program. The deadline to apply for these grants is December 31, 2023.
DWD will incur administrative costs associated with the approval of work-sharing programs, changes to the
HB 1215 1 unemployment insurance benefit calculation to accommodate the new program, and fraud detection. Costs
in Indiana would depend upon the number of employers that submit work-sharing plans to DWD, as well as
the increased number of employees who would receive partial unemployment benefits due to these plans.
Unemployment Insurance Trust Fund: The bill should not impact the Unemployment Insurance Trust Fund.
In a work-sharing program, the number of affected workers receiving benefits may increase. However,
benefits are reduced by a percentage that is equivalent to the number of hours by which the employee’s
normal work week is reduced. A federal evaluation of these programs demonstrated only negligible impacts
to state trust funds as losses are typically offset by appropriately adjusted employer experience rates (which
determines how much in State Unemployment Tax (SUTA) a given employer will pay). It is possible that
negative impacts may be realized if employer participation in a program of this kind increases dramatically
at the same time that SUTA tax increases and adjustments are constrained. Employers pay for unemployment
insurance benefits through federal and state taxes.
State Agencies: If state agencies as employers implemented a work-sharing program, as opposed to layoffs,
the state would see additional fringe benefit costs. The impact on the state as an employer would likely be
minimal. [This bill has the potential to impact all agencies as employers, thus impacting all funds that provide
operating funds to agency staff.]
Additional Information - Under this bill, an individual who works for an eligible employer (2 or more
employees) for at least 16 months could receive up to 52 weeks of work-sharing benefits.
Work-sharing programs allow eligible employers to avoid layoffs by reducing the hours of work for an entire
group of affected employees. Work sharing allows the employer to maintain other employees on a full-time
basis. Under work sharing, workers affected by reduced hours may have their wages compensated with a
portion of their unemployment benefit. Twenty-seven states have STC programs in 2021. According to a
2016 Congressional Research Service report, STC payments represent a very small portion of overall
unemployment benefit payments. STC payments peaked during the recession in 2010 at 3% of regular
unemployment compensation first payments.
Explanation of State Revenues:
Explanation of Local Expenditures: The impact on local units of government would be as an employer.
There will be some additional fringe benefit costs if local units decide to implement work sharing as opposed
to layoffs. The impact on individual local units would likely be minimal.
Explanation of Local Revenues:
State Agencies Affected: All agencies as employers; Department of Workforce Development.
Local Agencies Affected: All units as employers.
Information Sources: Department of Workforce Development.
26 U.S. Code 3306(v).
Congressional Research Service. (2016, November 1). Compensated Work Sharing Arrangements (Short-time
Compensation) as an Alternative to Layoffs. https://sgp.fas.org/crs/misc/R40689.pdf
HB 1215 2 U.S. Department of Labor Employment and Training Administration. (2012, June 18). Unemployment
Insurance Program Letter No. 22-12. Short-Time Compensation Provisions in the Middle Class Tax Relief
and Job Creation Act of 2012.
https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=9382
U.S. Department of Labor Employment and Training Administration. (2020, May 10). Unemployment
Insurance Program Letter No. 22-20. Coronovirus Aid, Relief, and Economic Security (CARES) Act of
2020 – Short-Time Compensation (STC) Program Grants.
https://wdr.doleta.gov/directives/attach/UIPL/UIPL_22-20.pdf
U.S. Department of Labor Employment and Training Administration. Short-Time Compensation Fact Sheet.
https://oui.doleta.gov/unemploy/docs/stc_fact_sheet.pdf
Fiscal Analyst: Camille Tesch, 317-232-5293.
HB 1215 3