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COVID-19: Colorado State Work-Share Program vs. the Paycheck Protection Program (PPP). Can I Use Both?

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In Colorado, a question amongst businesses has recently come up related to the Colorado State Work-Share program and whether that program would nullify the federal Paycheck Protection Program (PPP). A lot of businesses are asking, could a company use both of these programs?
April 14, 2020

In Colorado, a question amongst businesses has recently come up related to the Colorado State Work-Share program and whether that program would nullify the federal Paycheck Protection Program (PPP). A lot of businesses are asking, could a company use both of these programs?

The Colorado Work-Share Program is summarized below:

  • An employer who is facing the decision to lay off employees can consider reducing the hours of the employee and have the employee recoup some of the lost wages from the Colorado Department of Labor and Employment (CDLE.)
  • Employers who are eligible must have an “affected unit” which means a specified plant, department, shift, or other definable unit to which a work share plan applies.
  • "Work share plan" means a plan for reducing unemployment under which employees who are members of an affected unit share the work remaining after a reduction in their normal weekly work hours.
  • The employer must show that at least two employees in an affected unit are participants of the plan.
  • The work share plan must reduce the normal weekly hours of the participating employee by at least ten percent, but not more than 40%.
  • CDLE will look at the total weekly benefit the employee would receive had they been unemployed. They will multiply this amount by the reduction in hours (10%-40%) and make a payment to the employee for that amount. CDLE will make payments for up to 26 weeks.
  • The employer will be charged for any payments made to employees by CDLE as a result of this program.
  • Example- “You plan to lay off your employee. The employee may have earned enough for CDLE to be able to pay $250 a week. Instead of laying the employee off, you reduce the hours and pay by 10%. CDLE pays 10% of the applicable unemployment benefits, in this case $25, for each week the employee works the reduced schedule. The employee receives pay from you and the work-share benefits from CDLE.”

While each businesses’ circumstances and background will determine eligibility for either program, there is nothing that explicitly prohibits a business from taking part in the Colorado Work-Share Program and the Paycheck Protection Program.  An employer participating in both programs will need to be very thoughtful and proactive in modeling how the Colorado Work-Share Program could impact the forgiveness of the PPP loan. 


To learn more about seeking the benefits from both of these programs, talk to your RubinBrown advisor.

 

Readers should not act upon information presented without individual professional consultation.

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

 

 


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