Furloughs are usually imposed as a cost saving measure when an employer does not have the resources to pay its employees but does not want to lay them off. During the leave, an employee does not get paid but they are still technically employed by the employer. Furloughing a non-exempt employee can involve a mere reduction in hours or the complete cessation of work. Alternatively, a layoff is a separation of employment for an indefinite or permanent period of time.
A laid off employee does not have any employment relationship with the employment thereafter. The main differences between a furlough and a layoff lie in the fact that a furloughed employee still retains its employee status. Thus, furloughed employees have an expectation that they will return to work when the furlough period ends. If an employee has been laid off, there is no such expectation. These are all types of cost-saving employment actions that are commonly misunderstood because the words are often used interchangeably when their meanings are actually different.
Below are general descriptions of these terms; however, it is important to point out that not everyone will use these terms to mean the same thing. Understanding the context of the specific circumstances is more important than the term being used. This applies not only when communicating employment actions to employees but also when complying with legal requirements such as those under the WARN Act or state termination pay, or for purposes of responding to unemployment claims.
A furlough is a mandatory temporary leave of absence from which the employee is expected to return to work or to be restored from a reduced work schedule. Furloughs are often used when the employer does not have enough cash for payroll for example, government shutdowns due to lack of budget approval or when there is not enough work for all employees during a slow period and, by reducing employee schedules, the employer can avoid terminating employees. Furloughed employees may be required to take a certain number of unpaid hours off over a number of weeks, take a specified number of unpaid days or hours throughout the year, or take a single block of unpaid time off.
For example, an employer may furlough its nonexempt employees one day a week for the remainder of the year and pay them for only 32 hours instead of their normal 40 hours each week. Another example of furlough is to require all employees to take several weeks of unpaid leave sometime during the year. Employers must be careful when furloughing exempt employees so that they continue to pay them on a salary basis and do not jeopardize their exempt status under the Fair Labor Standards Act FLSA.
A furlough that encompasses a full workweek is one way to accomplish this, since the FLSA states that exempt employees do not have to be paid for any week in which they perform no work. Depending on the specific circumstances, furloughed employees may be able to continue benefits coverage and also collect unemployment insurance for the reduction in the time worked. A layoff is generally considered a separation from employment due to a lack of work available. Cancellations, quarantines, and social distancing are causing many companies to furlough or lay off employees—and in some instances, both.
But what is the difference between furloughs and layoffs? For more words related to the coronavirus, see our glossary. And for more important distinctions between confusing words related to the coronavirus, see our articles pandemic vs. People often encounter the word furlough during government shutdowns, in which nonessential public employees are told not to go to work. Private companies, however, also furlough employees. In general, people are not paid during furloughs but they do keep employment benefits, such as health insurance.
Furloughs are mandatory. Workers are ordered not to do anything work-related while they are on furlough. In a case brought by newspaper carriers against the Sacramento Bee, the court ruled that they were not automatically classified as independent contractors, even though their contract clearly stated such Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email.
Register For News Alerts. Article Tags. More Tags. NOV Securitisation Outlook and Key Tax Updates for More Webinars. Artificial Intelligence. Aviation Finance. Aviation Regulation. Banking Regulation. Mondaq Advice Centres. United States. International Trade and National Security.
Advertising and Marketing. More MACs. More filters.
0コメント