Partial Unemployment – What Is It And How Does It Work?

The “reason that the law provides for partial UI benefits is to encourage employees whose hours are reduced to stay with the job and work the available hours…

By Mario R. Hernandez

The unemployment insurance (UI) system has many provisions that regulate the administration of unemployment benefits to individuals who are out of work through no fault of their own.

However, what does it mean to be out of work?

Believe it or not, claimants can receive partial unemployment benefits while earning wages if they meet certain requirements. This article will explore the concept of partial unemployment benefits and some of the major details associated with them.

How Does a Partial Unemployment Scenario Occur? A partial unemployment scenario can arise if the employer reduces an employee’s hours by a certain amount.

While the employer may have a very good business reason to reduce an employee’s hours (i.e., lack of work or lack of revenue), it is still a reduction that is initiated by the employer that leaves the employee with less weekly earnings.

The Texas Workforce Commission’s (TWC) Appeals Policy and Precedent Manual contains precedent cases dealing with various types of work separations, including partial unemployment.

For instance, there is a precedent case dealing with a claimant being entitled to partial benefits due to a decline in business (see TPU 455.05 Appeal No. 87- 04539-10-031687 in TWC’s Appeals Policy and Precedent Manual).

What Does It Mean to be Partially Unemployed? The controlling law for partial unemployment can be found in §201.091 of the Texas Labor Code (http://www.statutes.legis.state.tx.us/Docs/LA /htm/LA.201.htm#201.091).

The law might look complex for those who are uninitiated in reading legal statutes. However, a good encapsulation of what the law says can be found in our Especially for Texas Employers online handbook. In essence, “…a partially unemployed person is someone whose pay, due to a reduction in work time, is below 125% of the weekly benefit amount to which he or she would be entitled if totally unemployed” (see: http://www.twc.state.tx.us/news/efte/ui_law_eligibility _issues.html#partialui2).

Moreover, much like people who are totally unemployed, partially unemployed individuals can file for and draw unemployment benefits so long as they continue to report their earnings and do not earn 125% or more than their weekly benefit amount.

The reported earnings also work as an offset to their partial unemployment benefit amount. For more information about partial unemployment benefits, please visit the link immediately above.

10 Texas Business Today in Fourth Quarter 2017 Are There Limitations to Partial Unemployment Benefits?

In addition to the employee’s continuing obligation to report earnings while receiving partial unemployment benefits, there are other stipulations that are associated with these benefits as well.

For instance, if an employee requests that his or her hours be reduced, the employee would likely not qualify for partial unemployment benefits because the reduction in hours would have been initiated by the employee. A best practice would be to get any such request in writing from the employee.

Additionally, an employee may experience challenges in qualifying for partial unemployment benefits if the reduction in hours was due to disciplinary action that resulted from misconduct connected with the work.

To summarize, the big limitations on partial unemployment benefits consist of earning 125% or more than one’s weekly benefit amount, failing to report earnings while receiving partial unemployment benefits, and reductions in hours that take place due to the request or fault of the employee.

An employee will also be ineligible to receive partial unemployment benefits if the employee is working his or her customary full time hours. What Do Partial Unemployment Benefits Mean for Employers? Some employers are startled to find that an employee who is currently working for them can collect unemployment benefits.

This discovery can also lead to another question: Do partial unemployment benefits work any differently than regular unemployment benefits in terms of their effect on the employer’s unemployment tax account?

The answer is that partial unemployment benefits can be charged back to the employer’s account just like regular unemployment benefits, if the employer has reported base period wages for the employee in question (for more information on the base period, please visit: http://www.twc. state.tx.us/jobseekers/eligibilitybenefit-amounts.

However, affected employers will still get notice of the claim, and will have the opportunity to respond. This is important to remember because it gives the employer the chance to explain why the reduction of hours occurred in the first place – and as noted earlier, if the employer is successful in showing the reduction in hours was initiated by the employee, it could have a good chance in prevailing on the claim.

Conclusion As seen in our Especially for Texas Employers handbook, the “reason that the law provides for partial UI benefits is to encourage employees whose hours are reduced to stay with the job and work the available hours, thus promoting employment, rather than quitting altogether and going on total unemployment.”

While these benefits could affect an employer’s UI tax account, the employer also gets the benefit of keeping a working employee.

As such, employers should be knowledgeable of the existence of partial unemployment benefits, and what these benefits mean for their workers and companies.