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What’s the Differences Between a Furlough and a Layoff?

Cost-saving employment actions are often perplexing due to the usage of interchangeable words that have different meanings. These varying interpretations can lead to potential confusion when making workplace decisions.

As an employee, knowing the difference between a furlough and a layoff can help you understand your rights in the workplace.

Below is an overview of the differences between a furlough and a layoff:

What is the Difference between a Furlough and a Layoff?

A furlough is typically a temporary leave of absence with no pay, whereas a layoff is usually a permanent termination of employment. Furloughed employees may still receive benefits, such as health insurance, during their leave of absence; a laid-off employee does not.

In addition, furloughs may be used for employees who are unable to work due to the financial circumstances of the employer, such as reduced demand or other economic issues. Layoffs, on the other hand, are used when there is no longer a need for an employee’s position or services.

What is a furlough?

With so many businesses struggling, many employers are trying to avoid permanent layoffs by putting their employees on furlough. A furlough is an employer-mandated temporary unpaid leave from work. Private and public employers can mandate that their employees go on furlough. Companies often furlough their employees to weather financial storms temporarily. In the case of public employees, furloughs typically happen during government shutdowns. When someone is furloughed, they generally need to work some hours or may be required to take a certain amount of unpaid leave. There are two common structures when it comes to furloughs:

  • First, an employer may furlough its nonexempt employees one day per week for the remainder of the year or pay them for only 32 hours instead of their regular 40 hours per week.
  • Another option is to require all employees (exempt and nonexempt) to take unpaid leave for a specified period (e.g., 30 days, 60 days, 90 days, etc.)

When it comes to furloughing exempt employees, employers must ensure that the employer does not perform any work during the furlough. If the employee does any work during the furlough, the employer must pay the employee’s full weekly salary for the week in which work was performed. To avoid this scenario, companies will often require the return of any work cell phones and laptops, as well as cancel any remote access to the company’s network that the employees may have.

During a furlough, employers may retain employee medical insurance benefits, although that’s not guaranteed and varies by company.

What is a layoff?

The term layoff has lost its true meaning because it is thrown around so much. However, with a layoff, the employee no longer has a job with the company. Specifically, an employee is laid off because his or her employer does not have sufficient work for him or her to perform.

An employer may believe that this situation will change and intends to re-hire its employees back to work when or if the need arises.

Employees are usually able to collect unemployment benefits while laid off without pay.

What is a reduction in force (RIF)?

The main difference between reduction in force (RIF) and the other kinds of workplace cuts is that a RIF is permanent. It means that any employees who are let go during a RIF will not be able to come back to the company. It is a permanent move, which is usually brought on by a strategy change, drastic budget issues, or bigger issues that cannot be solved by a temporary solution.

A reduction in force happens when a job is eliminated without the intention of replacing it and involves a permanent cut in staff headcount. A layoff may turn into a RIF, or the employer may decide to reduce their workforce immediately. A RIF can be achieved by terminating employees or by a gradual transition.

When an employee is dismissed according to a reduction in force, it is sometimes referred to as being ‘riffed.’

What Legal Protections do Employees have during Workplace Cuts?

When it comes to the legalities of workplace cuts, there are several important laws that all employers should be aware of. The most relevant federal law is the WARN (Worker Adjustment and Retraining Notification) Act, which requires certain employers to give 60 days’ advance notice of a layoff or other types of workplace cuts.

Other applicable laws include Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on race, color, religion, sex, and national origin; the Age Discrimination in Employment Act (ADEA); and the Americans with Disabilities Act (ADA).

If you believe that you were laid off or furloughed unfairly, you may be able to pursue legal action. It’s important to speak with an experienced wrongful termination attorney in order to understand your rights and the potential remedies available to you.

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