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Unemployment following a strike

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in Employee Benefits Program,Human Resources

Q. We are a small, nonunion parts supplier for a large, unionized manufacturing plant. Due to an ongoing strike by our primary customer’s union, demand for our product has decreased significantly, and we are having difficulty meeting payroll. Consequently, we are preparing to lay off several of our staff. While we hope to offer them their jobs back when the strike ends, it could be weeks or even months before our business gets back to normal.

Our CFO remembered reading that in Indiana, someone who loses his job due to a strike is not eligible for unemployment compensation. But, because the only reason we are laying our people off is due to the strike at our customer’s facility, can we contest unemployment for our laid-off staff?

A. The employees in your scenario are eligible for unemployment compensation benefits. They are not disqualified because of the strike at your customer’s facility. While Indiana law does disqualify employees from receiving unemployment compensation benefits if they lose their jobs due to an organized work stoppage, the stoppage or strike must be due to a labor dispute at the premises where the employees last worked.

In your scenario, the loss of work was not due to a strike at your facility. Therefore, even though you as a supplier are suffering losses because of your customer’s decreased productivity, your employees are not a party to the labor dispute.

As a result, while laying off your employees may be an economic necessity for your business, your employees are still entitled to receive unemployment compensation payments.

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