State program helps LI companies avoid layoffs
Photo credit: Kathy Kmonicek | Andrew Galambos, Director of Human Resources at American Diagnostic Corp. in Hauppauge. (Nov. 3, 2009)
Early this year, executives at American Diagnostic Corp. in Hauppauge were considering laying off about 10 percent of the company's 100-person workforce because the recession was hammering sales.
It was a tough option to ponder, said Andrew Galambos, director of human resources, because the maker and supplier of diagnostic medical devices like stethoscopes had never laid off workers.
Galambos said he suggested the company participate in a layoff-alternative state program he knew of. In lieu of cutting workers, employers cut the employees' hours and wages to save on labor costs, and the state makes up part of the pay loss for employees.
Increasingly, Long Island companies are participating in the program. Through Aug. 12 alone, 203 local companies have signed up, compared with 54 in all of 2008, according to state Labor Department data. Statewide, 1,683 companies have participated through Aug. 12, compared with 466 that participated in 2008.
"This was an excellent opportunity for us to be able to deal with the current economic situation without losing skilled labor," Galambos said, whose company participated in the program for about three months and has avoided layoffs.
The program has been around since 1987 but has experienced a renewed push because of the recession.
"It's become a very important part of our tool kit that we offer to employers because it just makes so much sense in this economy," said Mark J. Grossman, the department's regional director for Long Island.
To participate, employers file a shared-work plan that has to meet certain criteria, including the promise to retain employees and preserve their benefits.
Once the state signs off, a company's employees can apply for a weekly unemployment benefit of equal percentage to the wages they will lose.
So if an employee who worked 40 hours a week and made $400 is cut to $320 a week, a 20 percent drop, then under the Shared Work Program that worker can apply for 20 percent of the full unemployment benefit he would be entitled to if he lost his job. For a $400-a-week employee, the full unemployment benefit would be $200. Under shared work, the worker can file a claim for $40, or 20 percent.
The employee could also qualify for an extra $25 from the temporary federal unemployment benefits subsidy, for a total of $385 a week. Employees can receive the basic benefit up to 20 weeks in a year.
American Diagnostic began participating in the program on March 16. Eleven employees went from 40 hours to 32 hours, said Galambos, who wouldn't disclose how much money the program saved the company.
The program gave the company enough breathing room so that by the end of June, the employees were back to their full schedules.
"As things started picking up for us we started bringing more and more back," he said.
