What It Means to be Furloughed

    Business with furloughed workers closedThe number of people losing their jobs because of the COVID-19 pandemic continues to skyrocket at a record pace.

    Part of that number are those who are on “temporary layoff,” officially known as furlough. According to Bureau of Labor Statistics numbers released May 8, 18.1 million of those who are out of work are on furlough. That is 10 times what it was before the pandemic.

    If you’ve been furloughed, you already know it’s mandatory unpaid leave from work, but you may still feel like you’re in strange limbo with a lot of unanswered questions.

    • You’re not working … or working reduced hours.
    • You are not drawing a check … or drawing a much smaller one
    • You may … or may not still have health care and other benefits
    • But you still have a job.

    Furloughs come with a lot of different rules, depending on the state you’re in and your employer.

    • Do you get benefits?
    • Can you collect unemployment?
    • Can you work somewhere else while you’re not working for your boss, or even find another permanent job?
    • You may even be wondering if you should check your work email? Call that customer? Or finish that project, even though you’re” not really working.”

    Here’s a guide on how to navigate those uncertain waters.

    What Is a Furlough?

    A furlough is mandatory unpaid leave from work, or a reduction in hours. In most cases, it’s for a specific amount of time – two weeks, three months. Maybe it’s for one week a month for three months. Depends on your employer.

    One thing you have in common is that, once the furlough is over, in most cases, you go back to your job.

    Businesses furlough employees as a way to save money when revenues have slowed or stopped. The company isn’t paying you, but they want you back when they can pay you again.

    “Employee wages and salaries constitute the majority of a company’s operating costs,” Cindy Lo, people operations manager at FitSmallBusines.com said. “Furloughs are a way for companies to put a temporary pause on their highest costs so that they can keep their business open.

    “They may decide to furlough instead of a layoff because they believe the current situation is only temporary,” Lo said. “They are hopeful that the business will revert back to their previous profitable levels and will need everybody back to work when that time comes.

    “Most importantly, they do not want to lose the quality talent they have taken time to hire and train.”

    COVID-19 has been brutal on businesses in a variety of ways, and many of them are responding with furloughs.

    “[Furloughs] may be because of a temporary downturn in business or a short-term inability of employees to provide the company’s products or services, both of which we’re seeing now,” said Anna Barker, the founder of LogicalDollar.

    Businesses of every size and most sectors have furloughed employees since the COVID-19 pandemic began. Disney World furloughed 43,000 employees; JC Penny furloughed most of its workforce of 95,000, and Macy’s furloughed most of its 125,000 employees; GE furloughed 50% of its maintenance employees for three months — the list goes on.

    But it’s not just happening in companies that make the news. People who work for health care systems, newspapers, restaurants, hotels, state and town governments – you name it – have been furloughed

    Furlough vs. Layoff: What’s the Difference?

    A furlough is temporary – you will have your job back when it’s over. A layoff is a termination of employment.

    Often when someone is laid off, they get severance pay and accrued vacation pay. A furlough doesn’t come with any cash attached.

    A furlough can turn into a layoff if the situation changes for the worse. Because there’s so much uncertainty concerning what the fallout of the COVID-19 pandemic might be, the likelihood of that happening is very real.

    Will You Be Paid During a Furlough?

    You won’t be paid for the time you don’t work. If you are furloughed for two weeks, you won’t receive pay for those two weeks. Some employers allow workers to spread a furlough out – for instance take two weeks of unpaid time over the course of 10 weeks, working four-day weeks. In a case like that, the pay would be for the four days of work, not a full week’s pay.

    In some cases, particularly for furloughs longer than a few weeks, employers allow furloughed employees to use accrued vacation time or personal days as part of their furlough, easing the financial bite a little.

    It’s possible, but rare, that furloughed employees get reimbursed for the time off. That happened with federal employees furloughed during the government shutdown that ended in January 2019. They got back pay because their departments were funded when the federal budget was passed. If an employer has an increase in revenue after the furloughed employees return, the employer may feel bad for the financial hit the employees took and reimburse them, but that’s rare and unlikely.

    What Happens to Your Benefits During a Furlough?

    What happens to benefits is up to the employer. It can be complicated for them, since insurance premiums and other benefits come out of the worker’s pay. Some retain health care until the end of the month, some for longer. During the COVID-19 pandemic, many employers are still providing health care for furloughed workers.

    “(Health care) is not required, and it’s not guaranteed companies will provide this to furloughed workers, so it will largely depend on your employer,” said Barker.

    Health care options for those not covered are few. The Affordable Care Act is not open for enrollment during the pandemic, although some states have reopened their ACA exchanges. COBRA, the insurance continuation for laid-off employees, doesn’t apply to furloughed workers.

    Barker said it’s less common for companies to continue to provide benefits that aren’t health benefits to furloughed workers, though there are exceptions.

    “For example, Macy’s recently announced that its workers who have been furloughed will continue to receive health benefits,” she said. “They will also hold on to their employer-sponsored 401(k) accounts, although they will not be allowed to make contributions to it.”

    Can You Collect Unemployment During a Furlough?

    You can collect unemployment benefits while furloughed.

    You should apply for unemployment as soon as possible, particularly with unemployment across the country skyrocketing and overloading many states’  systems. The sooner you apply, the faster you’ll get your benefits.

    Barker said some states, before COVID-19, may not have provided benefits for furloughed workers. “This was temporarily resolved through the stimulus package recently passed by Congress, which provides for unemployment benefits for those who may have otherwise been ineligible at the state level,” she said.

    The change is subject to the unemployment being connected to the pandemic. It not only covers furloughed workers, but part-time employees, independent contractors and freelancers.

    Congress also approved $600 a week, as opposed to a smaller amount they might’ve gotten otherwise, to anyone eligible for unemployment insurance through July 31, so furloughed workers get at least that amount.

    Can You Get a New Job While on Furlough?

    You can get a new job, and you can also work at another job until your employer brings you back.

    “When furloughed, the understanding is that your employer plans to resume your employment in the future,” said Biron Clark, of Career Sidekick, a job search advice website. “However, you’re under no obligation to return to that employer. You can leave your job just like you could under normal circumstances.”

    Clark, who also worked as a recruiter and HR consultant, adds one important consideration. “Depending on what state you’re in, starting new employment can disqualify you from unemployment benefits or reduce your benefits, even if it’s part-time work,” he said. “Check with your state to know their policies before deciding what to do.”

    Lo also said that employees should review their contracts, which may have prohibition against working with competitors, or forbidding dual employment.

    “Employees should reach out to their HR if they are considering other employment during a furlough to ensure they are not taking actions that could prevent them from being brought back in the future,” she said.

    One place you shouldn’t work when you’re on furlough is for your employer. Some employers cut off employee access to email and other functions, but if you still have access, don’t check company email or do any other work for your employer.

    Doing unpaid work can cause complications for both you and the business you work for.

    The U.S. Chamber of Commerce stresses this to employers:

    “If your employees regularly communicate with customers and clients, make it clear that they cannot do so while they are furloughed, to avoid any legal claims of unpaid work,” the chamber says.

    How to Manage Finances on Furlough

    If you are furloughed, one of the most important things to do is make sure any questions you have about benefits, length of furlough and more are answered by your company. If they haven’t offered information, reach out to the HR department. If you’re in a union, your representatives should be keeping you updated on how it will work for you.

    Don’t be afraid to ask. It’s the employer’s obligation to be clear with you what your furlough means, so you can do your best to stay on top of your finances, health care and more.

    You should also immediately contact your state’s unemployment office and apply for unemployment. Don’t wait a day, particularly with the amount of people applying.

    If you aren’t already on a budget, it’s a good time to figure out how much you can spend on necessities, and if you can do it.

    This may be a time when, if you have credit cards, you’re going to rely on them more. If you feel burdened by debt while unemployed, consider reaching out to a credit counselor at a nonprofit credit counseling agency. Credit counseling can help you work on a budget and stay within your means until you’re back at work.

    Maureen Milliken

    Maureen Milliken is a journalist and editor with a concentration on business-related news, and more than three decades experience. She is also a published author, including the nonfiction The Afterlife Survey (Adams Media, 2011) and mystery novels Cold Hard News (2015, S&H Publishing), No News is Bad News (2016, S&H Publishing) and Bad News Travels Fast (2018, S&H Publishing). She also independently published "Get it Right: A Cranky Editor's Tips for Grammar, Usage and Punction" (Amazon, 2013).

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