Furlough is a temporary leave situation that employers implement for reasons such as budget issues, a slow-down in business, or other non-discipline related issues. Typically, employees will be placed on this temporary, unpaid leave for a specified amount of time.
Furlough may be required or it can also be voluntary, depending on the situation. Often confused with a layoff, furlough differs in that the employee will continue to hold and work their job, as though the time away were days off without pay. Similar to unpaid leave, and usually taken at the request or as required by the employer.
The issue that most frequently arises with furlough is the classification of the employee as exempt or nonexempt according to labor laws.
- Nonexempt employees: Entitled to be paid for the actual hours they worked. For instance, if the employer requests Fridays to be taken off, then the employee would be entitled to their wage for work performed Monday through Thursday. Furlough with non-exempt employees is simple, whereas furlough with exempt employees is more complex.
- Exempt employees: The reason exempt employee furlough is more challenging is because these employees are entitled to a full week’s salary for any week that they worked, even if it was for one hour. So, if the employee is not paid a full work week, then their exempt status could be revoked. This means that an exempt employee cannot be furloughed unless it is for the entire week.
Another issue is that an employee could lose their exempt status if their weekly salary falls below $455. An employment attorney can advise you on implementing furloughs in regard to an employee’s exempt or nonexempt status. Legal consequences or corrective measures with the company could occur in the instance of a violation, which is a good reason to speak with an attorney before taking action.
Furlough is typically used for companies to avoid layoffs (that can lower employee morale and cost money for severance packages) or due to seasonal labor. During a furlough, unless stated otherwise by the employer, the employee can be terminated. Regardless if the furlough is due to layoffs or due to seasonal labor. Unless stated otherwise in the employee’s contract, the employer has every right to turn the employee’s furlough into a complete dismissal.
For employees, furlough could reduce total monthly hours and jeopardize their status as either full-time or part-time employees; this change could negatively affect their eligibility for employment benefits.
If a collective bargaining agreement is in place, furlough could be at issue in negotiations and bargaining procedures.
Furlough policies and disputes arising from them can be complex. If you have experienced a furlough issue where your rights may have been violated, contact an employment attorney as quickly as possible. An attorney can advise you of your best course of action, and may be able to attain damages such as back wages or reinstatement of your benefits.