Furlough is a type of temporary leave that companies use for reasons such as budget constraints, economic slowdowns, or other non-discipline-related difficulties. Employees are typically placed on this brief, unpaid absence for a set period of time.
Furlough may be required or voluntary, depending on the circumstances. Furlough differs from layoff in that the individual will continue to keep and work their job as if the time away were days off without pay. Similar to unpaid leave, this is frequently done at the option of the employee or as needed by the employer.
The primary distinction between a furlough and a layoff is that a furlough permits workers to return to work. Some layoffs are temporary, and workers are recalled to their jobs; however, when management decides that the employees will not be recalled, the layoff becomes permanent.
Employees who are temporarily laid off will normally be allowed to collect unemployment benefits and, in some cases, may be able to preserve their benefits coverage, such as medical and dental insurance, as an incentive to remain available for recall. A severance package may be paid to employees who were part of the company’s reduction in force in the case of permanent layoffs.
Employees will not be allowed to claim unemployment benefits if their furlough is only for one week or less. Unemployment benefits regulations vary by state; an employment attorney can assist you in determining the legalities of your specific job status.
A temporary layoff is when an employer removes employees from their positions for an indefinite length of time. A temporary layoff can occur for a variety of reasons, including:
- When a job is only intended to be a seasonal position;
- When the company is undergoing construction or renovations;
- When an employer is in financial trouble and is forced to reduce labor costs for a limited time; and/or
- When the weather makes the work impossible (e.g., construction work during the winter) so operations must be temporarily suspended.
In contrast, permanent layoffs can occur when a company is short on work and/or profits and cannot afford to keep its full crew employed. For example, if a corporation’s branch does not appear to be generating any revenue, the company may opt to permanently lay off certain employees or close that branch entirely.
Due to the epidemic, many employers and workers have had to deal with temporary or permanent layoffs at various companies since March 2020. In rare cases, a company may have permanently closed or gone bankrupt. In that case, its staff would be laid off indefinitely. On the other hand, several businesses chose to temporarily halt operations and so only had to temporarily suspend certain of their employees.
This has resulted in many workers losing healthcare coverage as well as income or salary, which has increased the number of claims for unemployment benefits.
Furthermore, because of the pandemic’s impact, many workers who would not typically be eligible for unemployment benefits are suddenly eligible. This is due to temporary federal and state rules put in place to deal with the current national crisis.
What Legal Issues Are Connected with Furlough?
The most common furlough legal issues are determining whether the employee is exempt or nonexempt under labor regulations.
- Nonexempt employees: Employees who are not exempt are entitled to be compensated for the actual hours worked. For example, if the employer demands that Fridays be taken off, the employee is entitled to their regular pay for labor accomplished Monday through Thursday. Furlough for nonexempt employees is straightforward; however, furlough for exempt personnel is more complicated.
- Employees who are exempt: Exempt employee furlough is more difficult because these employees are entitled to a full week’s wage for each week worked, even if it was only for one hour. As a result, their exempt status may be terminated if the employee is not paid for the entire work week. This means that an exempt employee cannot be furloughed for more than one week.
Another difficulty is that an employee’s exempt status may be lost if their weekly wage falls below $455. An employment lawyer can advise you on whether to implement furloughs based on an employee’s exempt or nonexempt status.
Exempt or nonexempt employees, wage and hour laws, collective bargaining obligations, contract claims, discrimination or retaliation issues, workers’ compensation, loss of benefits, and issues related to the Worker Adjustment and Retraining Notification Act are just a few of the issues that can arise when a furlough or layoff is implemented.
Employment discrimination is one of the more widely known topics. Employers are not permitted to furlough or lay off a group of employees on the basis of any type of discrimination. If it appears that an employer violated the legislation prohibiting workplace discrimination, they will be held accountable, and employees who were discriminated against may be entitled to monetary compensation.
A WARN notice will be required in cases of mass layoffs that result in at least a 50% reduction in work hours in 6 months. In companies with 100 or more employees, the WARN Act requires employers to give employees 60 calendar days’ notice of layoffs.
Employee handbooks and employment contracts may contain policies on how layoffs and furloughs are to be handled. There are numerous more issues concerning your rights as a furloughed or laid-off employee, which is why seeking legal representation is strongly advised.
In the event of a violation, legal implications or corrective steps with the firm may occur, which is a solid reason to consult with an attorney before taking action.
How Long Can a Company Furlough an Employee?
There is no time limit on how long an employee can be furloughed. However, extended furloughs can reflect negatively on your organization and lower morale.
Employers will often execute an employee furlough if they expect employees to return to work within a year.
Can You Be Fired During Furlough?
Businesses commonly employ furlough to avoid layoffs (which can affect employee morale and cost money for severance packages) or seasonal labor.
Unless the furlough regulations say otherwise, an employee may be terminated while on furlough, regardless of whether the furlough is due to layoffs or seasonal labor. Unless otherwise mentioned in the employee’s contract, the employer has the right to terminate the employee’s furlough.
What Other Issues Does Furlough Raise?
Employee furlough laws by state may lower total monthly hours and threaten employees’ positions as full-time or part-time employees; this change may affect their eligibility for employment benefits.
Furlough may be a problem in discussions and bargaining procedures if a collective bargaining agreement is in effect.
Furloughs are subject to a specific norm for salaried exempt personnel in the public sector, as specified in the following regulatory text.
Deductions from an employee’s pay for absences owing to a budget-required furlough do not prevent the employee from being paid on a salary basis, except during the workweek in which the furlough occurs, and the employee’s pay is proportionately lowered.
The classification of an employee as essential or critical for the purposes of a necessary furlough has no bearing on the applicability of the FLSA.
Do I Need a Lawyer for Furlough Disputes?
If you are facing a furlough or layoff in your workplace, you should consult with an employment attorney as soon as possible. An expert employment lawyer can advise you on your rights and the best course of action and aid you in filing a complaint, if necessary.
