What Is a Furlough and My Rights as an Employee?

Have you recently been furloughed? You are not alone! What now? What does “furlough” even mean? How will you get money? Will you still keep your health and life insurance? These are the questions going through millions of worker’s heads across the United States right now because the Coronavirus (COVID-19) Pandemic has temporarily decimated entire sectors of the American economy. Many people have already lost half of their businesses, and many others have gone bankrupt. The remaining workers and businesses are forced to work remotely from home.
What Is a Furlough and My Rights as an Employee?
However, not all jobs allow employees to work from home. As such, many industries and retailers have furloughed their employees as they cannot afford to pay employees their regular wages. The first wave of COVID-19 related furloughs started in the obvious sectors of the economy, such as the hospitality industry (Marriott International), and the Airline industry (Virgin Atlantic). Retailers started shuttering their businesses two weeks ago. Large retail chains like Macy’s and Gap announced that they planned to furlough their workers as they have lost most of their sales, and they are forced to close most of its stores due to the outbreak. The total numbers of furloughed employees across the US could very well hit 1 million soon.

What is a Furlough?

A furlough is a mandated unpaid leave of absence of employees from work during tough economic times. Employers are typically forced to furlough employees to reduce further financial stress to their business. Furlough follows a No Work Rule for exempt employees; that is, employees are not allowed to work on behalf of their employer whatsoever, not even for 5 minutes. Employees cannot take phone calls or reply to emails on behalf of the employer until they are asked to do so. If an employer asks for any work from the employee while the employee is on furlough, the employer must pay the employee equivalent of his/her weekly salary. Some furloughs may mean cutting non-exempt employees’ hours/days to part-time or to a minimum. On the other hand, you may be asked to take off a couple of days/week unpaid if you’re an hourly employee, or one week/month off if you’re a salaried employee. The current wave of furloughs will last presumably last for a few months or until Americans can resume a normal life.

Employees may receive health and life insurance benefits while being furloughed; some of them are getting partially paid. By maintaining these types of benefits, this is one way for employees to know that their company is serious about keeping them and resuming regular hours once it’s financially realistic to do so. On the other hand, some benefits, like an employer matching 401k contribution, will be nonexistent, because, without a paycheck, there are no contributions for the employer to match. In some companies, vacation pays are also given to employees.

Additionally, furloughed employees have a right to seek new employment, which is the most significant threat to businesses, as they are at risk of losing their best employees. Furloughed and laid-off employees qualify for unemployment insurance. Specifically, to combat the current economic disaster, Congress passed a $2 trillion stimulus package to provide a safety net to workers, small firms, and corporations that were affected by COVID-19. Legislation has expanded unemployment insurance for workers who have been laid off, as well as assured direct payments to most adults. Additionally, Congress secured $377 billion in aid for small businesses in the latest #COVID19 stimulus bill.

Should you look for another job while you are furloughed?

What is a Furlough?
You should look for another job if you have no other options. You have to consider the possibility that your company will go bankrupt and will be unable to return to normal operations. While this is the worst-case scenario, it’s a possibility given today’s shaky financial times.

If you love your job and are loyal to your company, and you are confident that the furlough will be short-lived, then you can look for a temporary or a contract position. That way, when your company reopens, you will be available to return to work.

One take away from this article is that a furlough differs from a layoff. A layoff means you are unemployed, a furlough is unpaid leave. Not all furloughs are created equal, though the basic concept is the same: to keep valued employees on ice without being on the hook for their pay until a financial turnaround occurs. The good news is that, while furloughs are scary, they offer a measure of greater security than a layoff. During a furlough, most companies want to keep you available and expect to bring you back to regular hours once the hardship is over. If you are a furloughed employee or own a small business that has been impacted by the COVID-19 pandemic, contact us to discuss your options today.

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