Furlough Laws

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What Is Furlough?

Furlough refers to the practice of employers placing employees on temporary non-duty, unpaid status for a specified period of time, such as every 1st Monday of the month. This temporary leave is typically implemented due to budget concerns, slow business, or other non-discipline related reasons.

Furlough can be either mandatory or voluntary. It is different from a layoff in that the employee will continue to work regularly in their job otherwise. In other words, furlough is basically a cyclical day or days off without pay, similar to unpaid leave, but done at the request or requirement of the employer.

What Types of Legal Issues Are Connected with Furlough?

The main issue that arises with furlough is dependent on whether the employee is classified as non-exempt or exempt according to labor laws. These will be discussed separately below:

Non-exempt employees:

According to labor laws, non-exempt employees are only entitled to pay for the actual hours that they work. Therefore, furloughs are easier to implement with non-exempt employees as opposed to exempt employees.

For example, if the employer requires that the non-exempt worker take every Monday off, they may do so according to company policies. The non-exempt worker will then be paid only for the work that they actually do, that is, only from Tuesday until Friday. The employer will not be required to pay the non-exempt employee for the regularly scheduled day off on Monday.

Exempt Employees:

In contrast, it can be more difficult to institute furlough for employees who are classified as “exempt” according to wage and hour regulations of the Federal Fair Labor Standards Act (FLSA) or state laws. This is because exempt employees are specifically entitled to a full week’s salary for any week in which they have performed work. Thus, if the employer fails to pay an exempt employee for a full workweek in which they have worked, the employee’s exempt status may be negatively affected. 

Therefore, an exempt employee cannot be furloughed unless they are furloughed for the entire workweek. Otherwise, they will lose their exempt status. The exempt employee must not perform any work at all during the entire furlough week. This includes even the most trivial tasks, such as checking phone messages or e-mail, and any other work-related activities.

If a non-exempt employee performs any work at all during a furlough week, then the employer will be required to pay them their full week salary, or the employee may lose their exempt status. Also, an exempt employee can lose their exempt status if their weekly salary falls below $455 per week.

So, as you can see, it is of great importance that the employee institute furloughs with consideration of an employee’s exempt or non-exempt status. If the furlough violates exempt requirements, it could lead to corrective measures internally within the company, and legal consequences as well. 

What Other Issues Does Furlough Raise?

Furlough can often have the effect of reducing an employee’s overall monthly hours. In turn, this can have an effect on the worker’s status as full-time or part-time employee, which could ultimately affect their eligibility for employment benefits such as health insurance.

Also, furlough requirements may also be part of various negotiating and bargaining procedures, such as when a collective bargaining agreement is in effect. Check with a lawyer to determine whether your company’s furlough policies will affect you or your position in the company in any way. 

Do I Need a Lawyer for Furlough Disputes?

If you have a dispute over your company’s furlough policies, you should contact a lawyer to see if your rights have been violated. You may be entitled to legal remedies such as compensation for back wages or reinstatement of employee benefits. An employment lawyer who is familiar with the furlough laws in your state can assist you in obtaining the proper legal relief for your particular situation.

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Last Modified: 06-19-2014 09:59 AM PDT

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