During COVID-19, many employers have made the difficult decision to furlough employees across the United States. (Credit: Engin Akyurt on Unsplash.)
During COVID-19, many employers have made the difficult decision to furlough employees across the United States. (Credit: Engin Akyurt on Unsplash.)

What does it mean to be put on furlough? During COVID-19, many employers have made the difficult decision to furlough employees across the United States. Employees unfamiliar with the term may be scared and confused about what a furlough means for their personal situation in the short- and long-term.

The best way to understand furloughs is to study the meaning of this term and take a closer look at how the furlough process works. In this quick guide to understanding furloughs, I’ll be covering these key areas.

  • What is a furlough and how does this action differ from a layoff?
  • When should a business furlough?
  • What key points do employees need to know about being furloughed?
  • Should furloughed workers file for unemployment?
  • How long does a furlough last?
  • What are some helpful ways employers can stay connected with, and support, furloughed workers?

[Related: Even DVF May Not Be Able to Recover from Covid-19]

What is a furlough?

According to research provided by The Society for Human Resource Management (SHRM), a furlough is a temporary leave of absence. It is mandatory for the furloughed employee to go on leave or to take a reduced work schedule.

However, an employee that has been furloughed is also still considered to be an employee with the business. They will still have the ability to return to their job once the furlough period has ended. Some companies, especially those that request volunteers for furlough, may be able to share what this time period looks like in advance.

A furlough, as indicated above, does not have the same meaning as a layoff. SHRM defines a layoff as a type of termination where the employee is not to blame. There may be a lack of work available in their department or throughout their entire industry, such as watching bars shut down during COVID-19 due to safety concerns. This lack of work or risk at work makes it difficult for employers to keep employees that have specific roles. As such, a layoff may be implemented by the employer.

Some layoffs are temporary, meaning that the workers may be kept on call for when work is available again. However, others are permanent. Charlette Beasley, Careers and Workplace Analyst at Fit Small Business, notes that in the event of a layoff some employers will offer employees a severance package. This helps to tide them over financially for a time while they search for a new job.

When should a business furlough?

Furloughing employees is often contingent on the needs of the employer. Here are a few circumstances in which a business may decide to furlough employees.

  • If the employer doesn’t have enough cash for the employee’s payroll.
  • If there is a continued slow period in business without enough work for all employees.
  • If there is an unusual circumstance. Examples the global COVID-19 pandemic and government shutdowns.

[Related: When It’s Closing Time]

Key points employees need to know about being furloughed:

Every organization may have slightly different guidelines set for furloughs and it’s important that you do not assume all businesses follow the exact same procedures. During the furlough process, employees will need to ask and address the following areas.

  • Health insurance and benefits. Most furloughed employees are generally allowed to maintain health insurance. However, this may not be applicable to certain benefits such as 401(k) plans. Speak to your HR representative to determine which benefits you are able to keep under furlough.
  • Salary and pay. This varies depending on the company you work for, employee status, and its furlough practices. According to SHRM, exempt employees must continue to be paid on a salary basis under the Fair Labor Standards Act (FLSA). Nonexempt employees, however, must take a specific number of unpaid hours off over a specified time period. SHRM uses the example that employers may furlough nonexempt employees one day a week for the rest of the year. They would be paid for working 32 hours a week instead of 40 hours. It’s advised that you consult with HR to determine if you will receive pay during a furlough period and what the payment period looks like. You should also ask if you are an exempt or nonexempt if you are unsure of your employee status.
  • Unemployment. Are you able to collect unemployment during a furlough period? Most employers will encourage employees to file for unemployment during this time. Consult your employer to make sure this is okay.

As a small side note, it’s important to remember that furloughed employees should not perform work activities. Do not use this time to get caught up on work emails, create or schedule work-related social media content, or offer to help assist your boss with a side project.

[Related: 3 Tips for Retaining the Employees You Can’t Afford to Lose]

“Legally, employees cannot volunteer when they’re furloughed or perform any work-related activities,” says Beasley.

How long does a furlough last?

The timeline for a furlough is often contingent on the needs of the employer. Some employers may bring back a few employees early, depending on the workload and their prior responsibilities. Other employees may remain in furlough status until the business recovers.

However, it is not always a guarantee that the business will be able to bring back all furloughed employees. The maximum amount of time a furlough may last is one year. If a company cannot bring a furloughed employee back, they may need to arrange plans to permanently layoff the employee.

Helpful ways employers can support furloughed workers:

During a furlough period, it is critically important that furloughed employees are not left in the dark or forgotten. Leadership should be able to regularly connect with furloughed staff through email or phone calls for additional information on when the furlough period may end, and when they can return to work.

Beasley recommends staying in touch via monthly newsletters and emails that include countdown timelines. She advises using the newsletter to share current happenings in the company. Countdown emails provide a helpful, friendly reminder to employees of when the furlough will end, and they may be ready to return and transition back into the workplace.

[Related: More from Deborah Sweeney]