What is partial unemployment?

Partial unemployment is a term used to describe a situation wherein a worker is employed less than full time due to a lack of work. Some companies may offer reduced hours to employees as an alternative to being laid off completely or being made redundant. Partial unemployment may also result from a worker losing one of several part-time jobs and being unable to find sufficient employment to replace lost hours.

Workers are typically only considered partially unemployed if they want to work full time but are unable to due to circumstances outside of their control. In this respect, they differ from part-time employees who choose to work less than full time. Workers who are partially unemployed may be eligible for partial unemployment benefits. These state-governed benefits are designed to encourage workers to work part-time, if they’re able, while they continue to look for full-time employment.

When can an employee file for partial unemployment benefits?

Although eligibility requirements for partial unemployment benefits vary by state, employees can typically file a claim if one of the following situations applies:

• The employee’s hours were reduced due to a lack of work or another factor that’s out of their control. This can happen when companies restructure or have limited payroll resources, or during times of economic recession. A reduction in a worker’s hours may also occur due to workplace redundancy.
• The employee was temporarily or permanently placed on a zero-hour schedule, which does not guarantee the worker a certain number of hours each week. For example, in a predominantly seasonal industry such as tax preparation, an employee may agree to stay on in an as-needed capacity in times when work ebbs rather than lose their job altogether.
• The employee was laid off or terminated from a full-time job and was only able to replace it with part-time employment. In this case, the termination must have resulted from a lack of work or other factor outside of the worker’s control.
• A worker lost one of two or more part-time jobs. This typically happens when an employee maintains several part-time jobs to bring in a full-time income.

Through the CARES Act of 2020, many states also expanded unemployment benefits to cover employees who are unable to work due to circumstances related to COVID-19. For more information about the CARES Act and how it affects employers, contact your state’s department of labor.

Each state has additional eligibility guidelines for filing partial unemployment benefits, which employees must meet before receiving benefits. Depending on the state, this may include minimum earnings and time-of-employment requirements. Plus, in most states, workers must be willing and able to work full time. Employers may find out more about these state-specific guidelines by contacting their state’s unemployment office.

When can’t an employee file for partial unemployment benefits?

Not every part-time employee is eligible to file for partial unemployment benefits. In most states, workers who fall into the following categories may not apply for benefits:

• Workers who choose to reduce their hours of employment for personal reasons, such as caring for children or pursuing other opportunities
• Workers who move from a full-time position to a part-time job at a different company for personal reasons
• Workers who are not willing or able to return to a full-time schedule
• Workers who have not met minimum state requirements for earnings or time of employment
• Workers who are independent contractors

What are an employer’s responsibilities when it comes to partial unemployment?

As an employer, you must pay unemployment taxes to the federal and state government for every employee you hire. These are employer-only taxes with the exception of Alaska, New Jersey and Pennsylvania, which require minimal employee contributions. Unemployment taxes fund the programs that pay for unemployment benefits for workers.

After an employee files a claim, the worker’s most recent employer must be notified through a Notice of Unemployment Insurance Claim Filed. Employers must then respond to the claim by either accepting it or contesting it. Most states give employers a set period of time to respond to a filed claim. If you don’t respond in this time period, you’ll likely forfeit your right to contest the claim.

If the information the employee submitted when filing the claim is correct, you probably won’t want to contest it. However, you may wish to contest the claim if the employee submits incorrect information or is partially unemployed for one of the following reasons:

• The employee quit or requested reduced hours to accommodate personal obligations or to pursue other employment that fell through
• The worker was an independent contractor rather than an employee
• The employee was terminated from a part-time position due to misconduct

Contested claims should be backed up with relevant information and proof, and the state may request additional information or an unemployment benefits hearing.

As an employer, you’ll receive a determination letter once the state has approved or denied the benefits. Both the employer and employee have the right to appeal the decision.

Employers may have additional responsibilities when it comes to partial unemployment, as outlined by individual states. Examples of specific requirements by state include the following:

• In Georgia, employers must file partial claims online each week for workers whose hours have been reduced or eliminated for COVID-related reasons.
• Employers in California must provide a Notice of Reduced Earnings to employees before workers can file for partial unemployment benefits.
• New York has a Shared Work program that lets workers with reduced hours collect benefits. However, an employer must submit a Shared Work plan to the NYS DOL to be approved for participation in the program.

Calculating unemployment benefits

If you’ve had to reduce hours for employees at your company, you can help them assess potential benefits by using a partial unemployment calculator. Because unemployment benefits may vary widely by state, it’s important to use a state-specific tool and input accurate information about an employee’s wages.