Furlough vs Layoff, whats the difference?

As the Corona Virus Pandemic begins to affect business in the U.S., employers are turning to furloughs and layoffs to stay in business.

Furloughs have already begun in particularly vulnerable industries such as airlines and hospitality but also affecting many retail giants. Macy’s, Gap and Kohl’s furloughed hundreds of thousands of workers while closing stores. More than 10 million people applied for unemployment benefits in the month of March, according to the Department of Labor.

While some are able to work from home during the Corona Virus pandemic, other’s don’t have jobs which can accommodate remote work. Whether you are furloughed or laid off, the fact of the matter remains: You are not getting paid by your employer. Follow Spotlife Asia for the latest news and updates.

When you are laid off from your job, your relationship to your employer is terminated, and you are no longer on the payroll. When you are furloughed, your relationship to your employer continues, just without you getting paid.

Employers exclusively determine the terms and length of the furlough. They can set reduced hours, days, or weeks based on the needs of the company. Furloughed employees are absolutely banned from doing any work on behalf of their employer whatsoever. This is a zero-tolerance rule. A furloughed employee can’t so much as take a phone call or answer e-mails. Even five minutes breaks the No Work Rule.

If a salaried employee does any work while on furlough the employer must pay them the equivalent of their salary for the entire day. If an hourly employee works while on furlough the employer must pay them for the time worked. As a result, furloughed employees typically have their access to work accounts and devices revoked. This is to prevent well-meaning employees from breaking the law and triggering a payment obligation.

In the case of both furloughs and layoffs, you may be eligible to get unemployment insurance through the Corona Virus relief package provided by the CARES Act. Also Read: Stimulus check for Corona Virus?

Laid off employees are no longer considered staff members and are ineligible for coverage under a businesses’ group health plan. If you lose your job through a layoff, you may be offered COBRA continuation coverage by your former employer, which allows you to maintain the same benefits at your own expense that your employer’s health plan covered. 

Some employees who have been furloughed because of COVID-19 may not always get keep their health benefits as some plans require that employees must work a certain number of hours to receive benefits. If your employer says your health plan can continue, your employer needs to communicate with you on how employee deductions will work when you are not getting a paycheck.

Under new federal legislation (the CARES Act), any employee impacted by the COVID-19 outbreak may be eligible for unemployment compensation. Individuals will receive $600 per week in addition to their regular unemployment compensation under state law, through July 2020. If workers are still unemployed after their state unemployment benefits end, the federal government will fund up to 13 weeks of additional unemployment benefits.

Guidance from the Department of Labor allow states to expand eligibility to collect unemployment benefits for any employee affected by the pandemic, including when their company or their child’s school closes. Most states have expanded eligibility in response to the federal guidelines.

For laid off employees, states typically require people collecting unemployment benefits prove they are actively looking for work during the layoff. Specific states may relax these guidelines during the COVID-19 outbreak. Furloughed staff typically do not have to prove they are actively looking for work, since they are technically still employees.

When you are furloughed, you get to keep your employer sponsored 401(k) account, but you won’t be able to make contributions to it. For employees who are laid off, you have the option to roll your retirement assets over into an individual retirement account (IRA) or a new employer’s retirement savings plan, or to cash it out. 

Both layoffs and furloughs are meant on paper to be temporary events. However, layoffs often turn permanent, at least for a good portion of those let go. Furloughs can offer a bit more flexibility than layoffs, though layoffs are better for longer term reductions.

If you are dealing with an employment situation and facing difficulties, you should speak with an employment attorney with any questions. An experienced employment attorney will be able to advise you of your rights and your best course of action, as well as assist you in filing a complaint, if necessary.