If your employer has notified you about an upcoming furlough, you may be interested in learning how it can affect your job security and salary. Understanding what it means to be furloughed can help you anticipate the benefits, schedule and income you may have while on leave, which can inform the decisions you make about your future employment. In this article, we explore what a furlough is, how long it lasts, furlough laws and how furloughs differ from layoffs.
Related: What To Do if You've Been Furloughed
What is a furlough?
A furlough, sometimes called furlough leave, is mandatory time off work that typically occurs when a company's expenses exceed its revenue. Sometimes, furloughs are a reduction of hours or days worked per week. In other cases, they're extended periods of leave. While most furloughed employees don't receive a salary, they usually keep their jobs and benefits such as healthcare.
Employers may use a furlough to:
- Balance the company budget
- Manage staffing for seasonal positions
- Ensure employee health and safety
- Adjust to a decrease in revenue
- Handle a reduced supply of a basic part for a product
- Acclimate to lower demand for a service
- Transition to new national economic conditions
- Adapt to global health conditions
Types of furloughs
There are two main types of furloughs:
Using administrative furloughs, organizations conduct planned downsizing, typically because of a change in budget, outside funding or lack of available work for a particular position. It's not usually necessary for employees to report for work. While employers are not typically required to supply a salary, they may continue to offer benefits and job security.
Also called an emergency furlough, shutdown furloughs happen when there's a lapse in funding or budget allocation. They often occur in government agencies at the beginning of a fiscal year when lawmakers are still considering a particular law about how to disperse funds. Until lawmakers decide which projects to fund, the law requires agencies to shut down any activities that are still under dispute. While agencies rarely plan shutdowns, employees usually retain their positions during furlough.
How long does a furlough typically last?
While furloughs are generally temporary, the length depends on the needs of the company. Usually, companies tell employees in advance about a planned furlough. If possible, the company may also specify the length of the furlough or share that the furlough is indefinite. Here are a few ways employers handle furloughs:
- Fewer hours per day
- Reduced days per week
- Fewer weeks per month
In addition, extended furloughs may include long periods of time off, such as several months of leave for seasonal employees.
How does a furlough work?
Depending on the state and your contract with your employer, you may be able to seek temporary work during a furlough or accept unemployment benefits. Since furloughed employees keep their position and continue to receive benefits, they aren't eligible for severance pay, early retirement benefits or outplacement. To learn more about how furloughs work, consider the following relevant laws:
The Fair Labor Standards Act (FLSA) names specific rules for different kinds of employees. For example, full-time exempt employees are people who receive a salary of at least $684 per week and have administrative, executive or professional job duties. During a furlough, employers must give exempt employees their full weekly salary if they accomplish any work during that week. However, if they don't work at all during a full week, they do not receive their salary.
In comparison, non-exempt employees receive payment only for the hours they work during a furlough. Employers with non-exempt employees must obey minimum wage and overtime compensation regulations.
Read more: What Is a Full-Time Exempt Employee?
According to the U.S. Equal Employment Opportunity Commission (EEOC), employers must base furlough decisions on the following reasons:
- Economic or financial
- Work availability, such as seasonal conditions
- Health and safety
Legally, employers cannot furlough an employee because of the following characteristics:
- Genetic information
The National Labor Relations Act (NLRA) applies to businesses that are part of a union. When planning a furlough, an employer may renegotiate terms with a union to ensure they comply with the law. They may discuss:
- How to schedule furlough days, such as one day of furlough a week
- How to combine furlough days, such as one week of furlough per month
- How to meet employee needs, such as allowing them to decide when to take a furlough
Related: 5 Ways To Secure a Union Job
Furloughs vs. layoffs
While layoffs and furloughs both change an employee's job status, they're different in several fundamental ways. Knowing the difference between furloughs and layoffs can help you predict what kinds of benefits you may receive during a furlough, how your salary could change and what type of schedule you might have. It can also help you make important career decisions about whether to search for a new job, apply for unemployment benefits or return to work in your current position after the furlough has ended.
Here are some of the primary differences between layoffs and furloughs:
- Job security: While both furloughs and layoffs require an employee to stay home for a specific period, furloughs are often short-term solutions, and employees can typically expect to keep their jobs. In contrast, when an employer lays off an employee, it's a final decision and the employee doesn't retain their job.
- Schedule: Depending on the company's needs, a furloughed employee might work four days per week, work three weeks per month or follow a custom schedule that might require an extended period of leave. For example, seasonal employees may only work a few months per year. However, in a layoff, employees stop working on the day they're laid off and do not return to work.
- Benefits: Furloughed employees may continue to receive benefits, including healthcare, and they can also apply for unemployment. In comparison, laid-off employees may receive severance pay, early retirement benefits or outplacement.
- Salary: Whether a furloughed employee receives a salary depends on what type of employee they are. For example, an executive earning a high salary typically continues to earn the same amount of money if the furlough only involves a shorter workweek. Laid-off employees do not continue to receive a salary, but they may get a severance paycheck based on their contract.
Frequently asked questions about furloughs
To learn more about what a furlough means for you, review the answers to these frequently asked questions:
Is a furlough the same as a reduction in force?
Furloughs and reduction in force are different processes. A reduction in force happens when an employer eliminates a position permanently, such as when two positions are combined or when a particular role becomes outmoded. It can also occur due to a budget adjustment. In comparison, furloughed employees typically have the same position when they return to work.
What are the advantages of being furloughed?
While it can impact your income and schedule, here are a few positive aspects of being furloughed:
- You can maintain the same position.
- You can continue receiving benefits.
- You can plan for the transition, especially during an administrative furlough.
Should I get another job while I'm on furlough?
Depending on how your employer handles the furlough, getting an additional job during your leave can help you recover your reduced income. For example, if your company issues a short furlough period, such as one month, you may consider getting a temporary job during your leave. In comparison, if your employer reduces hours or days per week, it may be helpful to get a part-time job.
Before applying for another job, consider checking your employment contract to ensure your employer allows you to work elsewhere during furlough. If you cannot get another job, you can contact your state unemployment office to learn more about receiving unemployment benefits during your furlough period.