What is Furlough?
Furlough refers to the practice of employers who place employees on temporary non-duty, unpaid status for a specified period of time, such as every 1st Monday of the month. Furlough 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 employer will continue to work regularly otherwise. Furlough is basically a cyclical day or days off without pay.
What Types of Legal Issues are Connected with Furlough?
The main issue that arises with furlough has to do with whether the employee is classified as non-exempt or exempt according to labor laws. These will be discussed separately below:
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
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 an 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, to be safe, any 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. Also, an exempt employee can lose their exempt status if their weekly salary falls below an amount of $455.
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 also 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. This could ultimately affect their eligibility for benefits such as health insurance.
Also, furlough requirements may also be part of various negotiating and bargaining procedures, like when a collective bargaining agreement is in effect. Check with a lawyer to determine whether your company’s furlough policies will affect you in any way.
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Last Modified: 03-24-2011 12:14 PM PDT
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