Furlough vs. Layoff

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 What are Furloughs and Layoffs?

The terms “furlough” and “layoff” refer to two different types of methods that a business can use in order to reduce its labor costs.

In general, a furlough is defined as a temporary period in which an employer requires a worker to take unpaid time off work. The main idea behind a furlough is to retain the employer’s workers, while at the same time, reducing the employer’s labor costs by decreasing the number of hours that the workers are permitted to work.

Furloughs can arise in many different forms, such as having an employee work fewer hours; giving the employee a full week off (unpaid of course); or designating a “furlough day” once a month when employees will be required to stay home. Regardless of the type that an employer decides to use, if a worker is subject to furlough conditions, it is usually mandatory that they abide by the employer’s procedures for it.

In contrast, a layoff essentially terminates the employment arrangement for the worker. A layoff typically occurs when a business encounters financial hardship or the worker’s job is no longer necessary. Unlike furloughs, a layoff means that the employee is completely cut off from payroll and can usually apply for and collect unemployment benefits.

There are some situations, however, where an employer or business may want to reinstate their laid off employees, such as if the business has financially recovered or the employee’s job becomes necessary once again. In such cases, an employer may permit an employee to keep their benefits coverage (e.g., health insurance) as an incentive to return to the company.

What are Some of the Differences Between a Furlough Versus a Layoff?

An employee on furlough is still considered an active worker within the company and thus will be able to return to their job at the end of the furlough period. While this will depend on individual company policies, there are some instances where the employee can continue to accrue certain benefits, such as paid vacation, pensions, retirement accounts, and so on.

In cases where the furlough lasts only for a week or less, an employee will most likely not be able to collect or receive unemployment benefits. Again, the guidelines will be contingent on the individual employer’s policies.

On the other hand, an employee who was laid off will not be considered as still active within the company. Although a laid off worker can always be invited back to the business and their job, unlike a furlough there is no set period to decide if or when such an event may happen.

In addition, even if a laid off employee gets rehired, they may have to go through the same hiring process as a new employee. Also, laid off workers do not normally accrue or keep their benefits. As discussed above, however, an employer may allow a laid off worker to maintain certain benefits as an incentive to remain available for rehiring again.

Lastly, a laid off employee may be offered a severance package upon their dismissal. A severance package is usually not issued for an employee who is only furloughed.

What Kinds of Legal Protections Do I Have During a Furlough or Layoff?

The implementation of a furlough or layoff can raise many issues, including those related to: exempt or nonexempt employees, wage and hour laws, collective bargaining obligations, contract claims, discrimination or retaliation issues, workers’ compensation, loss of benefits, and issues related to the Worker Adjustment and Retraining Notification Act (WARN).

One of the more publicized issues is that of employment discrimination. Employers cannot furlough or layoff a group of employees based on any form of discrimination. If it appears an employer violates the law against workplace discrimination, they will be held liable, and employees who were discriminated against may be entitled to damages.

In cases of mass layoffs that result in at least a 50% work hour reduction in 6 months-time, a WARN notice will be required. The WARN Act provides employees with a 60 calendar-day advance notice of layoffs, in companies that have 100 or more employees.

Employee handbooks may have policies on how layoffs and furlough are to be addressed, and it may also be in your employment contract. There are many other issues pertaining to your rights as a furloughed or laid-off employee, which is why seeking legal counsel is highly encouraged.

What If I Have a Dispute Involving a Furlough or Layoff?

Generally speaking, the legal claims pertaining to furloughs and layoffs tend to be different in nature. For instance, lawsuits involving furlough are usually concerned with disputes over wages and hours, or relate to issues regarding employee benefits.

As for lawsuits involving layoff claims, these usually focus on issues, such as wrongful termination, retirement benefits, and employment discrimination.

Whether the dispute involves a furlough or layoff action, an employee will most likely be required to file a complaint with the company’s human resources department first.

If the human resources department is unable to resolve the worker’s issue internally, then that worker may have to pursue their claim by filing with the appropriate government agency or by hiring a lawyer and taking their case to court.

Finally, laws regarding employee or unemployment benefits may vary depending on the statutes enacted by each state.

Do I Need to Hire a Lawyer for Help with Furlough or Layoff Issues?

Legal matters involving furloughs and layoffs can become quite complicated. In fact, several steps must be taken before a claim can even reach a court. Therefore, if you have been unfairly dismissed from your job or denied earned wages, you should contact an employment lawyer located near you.

An experienced wrongful termination lawyer will be able to determine what legal remedies are available for your case, can help you gather supporting evidence, can hold depositions for any witnesses, file the necessary paperwork, and provide representation on your behalf in court.

In addition, a lawyer can also help you to settle any disputes with your employer through negotiations or by other alternative dispute resolution methods.

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