Is being furloughed the same as being laid off? Experts break it down
While most of us are staying home in order to be safe and help stop the spread of coronavirus (COVID-19), not everyone is lucky enough to be able to work while doing so. In fact, many industries and companies were forced to temporarily close their doors to help stop the spread of the virus, which has prevented employees from collecting a paycheck.
The pandemic has put many people in difficult financial situations. Some people were laid off and are now having to apply for unemployment, others are seeking out hazard pay, and many others have been suspended from working entirely but remain an employee of their company. If your company has suspended your work and sent you home without pay, that’s something known as furlough.
To help get a better understanding of what furlough means and how it affects workers, we talked to experts who were able to break it down for us.
What does furlough mean?
The literal definition of furlough is “leave of absence”—technically, “a temporary, unpaid leave of absence that has been mandated by an employer.” In other words, you still work for your employer, but you’re no longer performing a job, and, because of this, no longer being paid.
“It’s usually implemented by companies facing financial setbacks or dramatic changes in customer demands, market shares, and company structures,” explains Kelly Williams, a founding partner and attorney at Slate Law Group.
Furloughs are common in some seasonal businesses, but others are the result of a temporary emergency measure, like what we are seeing now with coronavirus.
“In light of the global shutdowns due to the COVID-19 pandemic, numerous businesses, small and large, are now choosing to furlough employees temporarily because they do not have the financial capabilities to continue paying a full staff,” she says.
How is being furloughed different than being laid off?
Being furloughed does not mean that your relationship with your employee/company is over for good. This is different from being laid off, where your relationship with your employer is terminated. When you’re laid off, it means that you’re no longer on the payroll and you no longer hold a title/position at the company. This could be because your role or position was eliminated from the company, there is longer work to support it, or the company is no longer able to financially support your position.
However, when you are furloughed, that leave of absence is mandatory, but the relationship and existing position remain.
“Your relationship with your employer and payroll status within the company stays,” says Williams. “You’re just not working or getting paid during the time you are furloughed.”
In being furloughed, your company technically keeps you on payroll because they plan to bring you back after a period of time, or at least hope that they’ll be able to.
Do furloughed employees get paid?
No. Although furloughed employees may still technically be on payroll for their employer, they’re not actively working for them, and therefore will not receive pay.
However, some companies continue to pay health benefits, explains Michelle Armer, chief people officer at CareerBuilder. For example, Macy’s furloughed much of its staff last week, but employees were told that the company would continue to pay health benefits and cover 100% of insurance premiums, at least through May.
When you receive your furlough notification letter, your employer should let you know if continuing these benefits is an option.
Can furloughed employees file for unemployment?
Yes, furloughed workers are eligible for unemployment benefits.
“Especially if an employee is furloughed because of COVID-19, he/she/[they] may qualify for unemployment benefits through the CARES Act because it’s no fault of [their] own,” says Williams.
The amount of unemployment benefits you are eligible for as a furloughed worker varies by state. Once you file on your state’s website, you should get a better idea of what kind of reimbursement you’re eligible for.
“It’s important to note that the difference between a furlough and a layoff doesn’t matter for unemployment eligibility, because unemployment generally considers each work week, and if a worker is making money or not, in order to determine eligibility,” says Armer.
How long is furlough?
There is no definite period of time for which an employee can be furloughed. In general, though, Williams says employers should furlough employees only if they plan to recall employees within a year.
In the meantime, Armer says workers who are furloughed still have the right to take on other work.
As information about the coronavirus pandemic rapidly changes, HelloGiggles is committed to providing accurate and helpful coverage to our readers. As such, some of the information in this story may have changed after publication. For the latest on COVID-19, we encourage you to use online resources from CDC, WHO, and local public health departments, and visit our coronavirus hub.