March 17, 2020

Despite many politicians and employers discussing the option for employees to work at home, there are millions of employees who simply cannot do that. Bartenders, restaurant servers, cashiers, and many others have no one to serve and nothing to ring up when they work at home. 

Employers of such employees accordingly have a difficult decision to make when business is at an all-time low or they have been shut down. Most cannot afford to pay employees during this time period and hope employees will qualify for unemployment benefits. The question for these employers thus becomes–to fire, or not to fire. 

This is where a work furlough comes into play. A work furlough is essentially a temporary layoff that qualifies for unemployment benefits.

Furloughs rose in popularity some years ago when businesses had to cut costs. Most employers knew employees who worked from paycheck to paycheck would suffer a financial hardship if the employees lost their jobs. Employers did not want to terminate employment. These employers wanted to minimize the negative impact, psychologically and monetarily, a termination brings, and the hard feelings an employee may carry following termination. Employers wanted employees who were already-trained to return to work at the end of a furlough, rather than having to start the hiring process from scratch.

Work furloughs generally have a set beginning and end date, similar to the 15-day shut-down ordered in many cities. The employer does not pay the employee during the furlough. Employees, however, generally qualify for unemployment compensation benefits. 

Employers who want to maintain better relations should tell their employees to apply for unemployment benefits on the first day of the furlough. This ensures the employees will receive the maximum compensation possible. Even an employee who uses vacation time or personal time may qualify for unemployment benefits. 

Usually there is a one week waiting period before an employee is eligible to receive any unemployment benefits. Many states have benevolently waived this one week waiting period for job losses suffered due to the pandemic. In these states, employees will receive benefits beginning “day 1.” The employee will receive compensation during the second week and any later weeks during which the employee is not working. 

Any employee who files after the first week of the furlough must use the second furlough week as the waiting period. The employee, therefore, loses a week of unemployment compensation. 

Even if the furlough period is only one week in length, employees should file for benefits. This helps the employee if the employer is forced to extend a furlough or put employees on furlough again later that same year. The one-week waiting period only applies to the first week when the employee did not work during the first furlough. The employee does not have to wait yet another week to receive benefits (compensation) during any furloughs that take place within 12 months of the first furlough. 

While furloughs are an excellent option for employers to consider, any employer considering termination or a furlough must carefully consider all state and local laws; the state emergency declarations and laws issued, given the pandemic; and federal law, including any relief package or whether the number of employees furloughed triggers obligations under WARN.