Employer Information for Furloughing Employees

What is the difference between a furloughing and laying off employees?

• A Furlough is a forced, unpaid leave of absence where an individual remains an employee.

Furloughed employees have an expectation that they will return to work upon a certain date or

a certain condition being met. Furloughed employees typically are able to retain their benefits,

including access to healthcare and life insurance.

*Any employee subject to a contract and/or union representation will need their contract re-

negotiated.

employer. This includes checking emails and/or taking phone calls. Even a few minutes may

trigger a requirement to pay the employee. To protect itself from well-meaning employees, the

employer may restrict an employee’s access to work accounts and devices.

*Recommend restricting access and/or providing the employee with a letter which clearly states

they are being furloughed and as such are prohibited from completing any work on behalf of the

employer.

• Furloughed employees have the right to seek new employment. However, employees may still

be bound to employer policies regarding outside employment and/or second jobs.

*Recommend including applicable policies or reference to applicable policies in an instructional

letter to the employee.

What laws are applicable to furloughing an employee?

• Fair Labor Standards Act (FLSA) – Defines exempt v. non-exempt employees

o Exempt employees – must receive fixed pay if complete any work on behalf of the

employer. Employer can reduce salaries.

o Nonexempt employees – Need to compensate employee for hours actually worked.

• National Labor Relations Act (NLRA) – Collective Bargaining

o Obligates an employer to negotiate terms and conditions of the employee furlough

• Equal Employment Opportunity Commission – Non-Discrimination

o Selection of furloughed employees should be completely neutral and should not target

benefits.

o FFCRA is the emergency law effective as of April 1, 2020 and apply to leave taken

between April 1, 2020 and December 31, 2020. See the Department of Labor and

Industries Questions and Answers web site for additional information and to determine

if the FFCRA applies to your situation.

• Consolidated Omnibus Budget Reconciliation Act (COBRA)

o A furloughed employee may fall below required minimum hours to meet benefit

eligibility and benefits may cease. Employees should be provided with a COBRA notice

upon termination of group health benefits.

• Unemployment Compensation

o Employers that close as a result of COVID-19 impacts will be granted relief from charges

and the employers’ unemployment tax rate will not increase.

• WARN ACT - Requires employee notice under specific conditions.

What are the furlough Notice requirements?

• Employers who place employees on furlough should provide a notice letter containing the

following:

o The letter should be formal in nature and include the date, employee’s name, and

employee’s address as well as a salutation.

o The first paragraph should clearly state the purpose of the letter and include the

employee’s position, department and reason for the furlough as well as any changes to

employer and end on a positive note.

o It is important to include that the employee should not complete any work during the

furlough period and provide guidance on restricted access and/or retrieval of employer

owned devices.