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Jun17

Pay unemployment during production shut down?

In Tennessee, would a manufacturing plant would an employee be entitled to unemployment benefits during a production shut down? What if the employee has available Vacation time, can we require that they use it if they want to be paid during that shut down period?

You will want to avoid paying unemployment as much as possible, because it will increase your premiums for many months to come.

Yes, as an employer you can dictate when employees will use paid vacation. Many factories simply shut down for one or two weeks in June or July, and require every employee to use his or her vacation time during this period. You should not make this optional, because an employee who declined to use his or her vacation would still be entitled to unemployment.

However, be aware that your employees earn the same amount when they are on vacation, as they do when working. If you pay everyone while you are shut down for a week, your payroll will be as high as if you operated for that week. If your goal is to save payroll immediately, then it is better to pay unemployment rather than vacation.

In many states, if the shutdown lasts more than one week, employees will qualify for unemployment if they are not being paid. Some companies avoid this by shutting down for a week, operating for a week,and shutting down for another week.

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This entry was posted on Thursday, June 17th, 2010 at 7:59 am and is filed under
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