What is a Furlough?

I have just been told there will be mandatory furloughs at work.  What does that actually mean; what is a furlough? An employee furlough is a mandatory suspension from work without pay with the expectation that they will return to work. Usually it occurs when an employer needs to reduce its budget or it doesn’t have the money necessary to pay their employees.

Furloughs are used as a cost saving measure to keep employees and not lay them off. Employers use it as a tool to achieve cost savings by reducing payroll. The objective is to spread the organization’s revenue reduction across all employees so everyone can keep their jobs. It could be an immediate furlough or a partial furlough with specific days that employees are not to work. Employers can not choose employees for furlough’s based upon race, color, sex, religion, national origin, age, disability or other protected status.

Benefits

• Furloughed employees generally retain some of their benefits especially their health and life insurance.
• Personnel policies determine if accrued paid sick or vacation leave time can be taken during a furlough.
• Reduction in work hours from 40 to less than 32 hours a week may qualify you for unemployment in Colorado.
• Check with your employer as many benefits can vary.

No-work rule

A furlough means that employees are instructed not to perform any work for the company or organization during that time. Even answering a phone call or an email or working on a project violates this rule. If a salaried worker performs even one hour of work during the week, the employer must pay the entire salary for the week. Hourly employees are not allowed to do any work related to their employer either.

Different than layoff

A layoff typically results in an employer permanently terminating an employee from their job and stopping their benefits. A layoff happens when an employer can no longer afford to pay employees. If an employee is asked to return, they will need to be re-hired.

Rethink your financial plan

• Explore your options, since you will have a loss in income.
• Find out how your pay will be reduced and when that reduction begins.
• If you know a furlough is coming, spend less, reduce your expenses and save money now.
• If needed, suspend voluntary payroll deductions (retirement savings, charitable donations, etc.) during this time. Contact your Human Resource department for any necessary paperwork.
• Consider a temporary job during this time (check with your employer’s rules regarding outside employment).
• Check to see whether or not you are eligible for state unemployment compensation benefits for the time without pay.