Blog: Is a furlough a kinder, gentler lay-off? Yes and no.

One of the most common questions our firm has received from clients in the past month has been the difference between a furlough and a layoff. The answer is simple, yet complicated.
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Deborah Brouwer
Deborah Brouwer // Courtesy photo

One of the most common questions our firm has received from clients in the past month has been the difference between a furlough and a layoff. The answer is simple, yet complicated.

At one level, the use of the word furlough is interchangeable with layoff because they both reflect that an employee is not working and is not getting paid, and both furloughed and laid off workers may be able to file for unemployment. Yet, a layoff traditionally refers to a situation in which a recall, while perhaps a possibility, is not necessarily expected in the foreseeable future. A furloughed worker, at least in the current pandemic environment, is expected to be called back when the health crisis has abated.

Furloughed workers are those for whom there is no work now, such as a receptionist, building maintenance personnel, or customer service positions that require person to person contact. Even though a laid off worker may also be called back should the employer’s situation change, the layoff is generally considered permanent, and full termination procedures are initiated. This includes termination of benefits and payout of unused PTO if required by policy or law.

As opposed to a layoff, however, we’ve seen many employers generously continue the health insurance of furloughed employees, largely because they foresee the lack of work to be for a limited duration and they do plan on calling them back to work. Further, many insurers have permitted employers to keep furloughed workers on their regular health care plan under these conditions, and that’s heartening.

Unlike layoffs, furloughs can be partial. That might be a reduction in hours or a weekly rotation of work, including one week off and one week on. However, employers need to be mindful of FLSA requirements, particularly with salaried employees, when structuring these sorts of partial furloughs.

Whether fully furloughed or only partially furloughed, a furlough and work from home are not the same thing. Furloughed workers should not be performing any work during the furlough period. If the furloughed worker does perform work, they have to be paid. The employer therefore should put some procedures in place to comply with company security rules and best practices.

Such practices might include removing access to computer systems and collecting building keys and employee badges. With the majority of non-essential physical workplaces closed, there’s no reason for even current employees to have access to buildings unless expressly asked to do so. And because data security is critical for operations, furloughed workers should not have access to company information during the period when they’re not working; it can be easily be reactivated when the employee returns from furlough.

Attorney Deborah Brouwer is president of Nemeth Law, a labor and employment law firm based in Detroit. The firm exclusively represents management in the prevention, resolution, and litigation of labor and employment disputes.

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