Is a furlough a kinder, gentler lay-off? Yes and no, says Nemeth Law labor and employment attorney

April 20, 2020
Detroit, Michigan

Deborah Brouwer, a partner with Detroit-based management side labor and employment law firm Nemeth Law, P.C., says one of the most common questions from clients in recent weeks has been the difference between a furlough and a layoff. The answer is simple, yet complicated.

“At one level, the use of the word furlough is interchangeable with layoff because they both reflect that an employee is not working and is not getting paid – and both furloughed and laid off workers may be able to file for unemployment,” Brouwer said. “Yet, a layoff traditionally refers to a situation in which recall, while perhaps a possibility, is not necessarily expected in the foreseeable future. A furloughed worker, at least in the current pandemic environment, is expected to be called back when the health crisis has abated.”

Brouwer describes furloughed workers as those for whom there is no work now, such as a receptionist when no phones are being answered and there are no office visitors, building maintenance personnel for closed buildings, or customer service positions that require person to person contact. Even though a laid off worker may also be called back should the employer’s situation change, the layoff is generally considered permanent and full termination procedures are initiated.  This includes termination of benefits and payout of unused PTO if required by policy or law.   

“As opposed to a layoff, however, we’ve seen many employers generously continue the health insurance of furloughed employees, largely because they foresee the lack of work to be for a limited duration and they do plan on calling them back to work. Many insurers have permitted employers to keep furloughed workers on their regular healthcare plan under these conditions.  That’s heartening,” Brouwer said.

Brouwer also explained that furloughs, unlike lay-offs, can be partial.  That might be a reduction in hours or a weekly rotation of work one week/off one week.  Brouwer warns, however, that employers need to be mindful of FLSA requirements, particular with salaried employees, when structuring these sorts of partial furloughs.

“Whether fully furloughed or only partially furloughed, a furlough and work from home are not the same thing. Furloughed workers should not be performing any work during the furlough period,” Brouwer said. “If the furloughed worker does perform work, they have to be paid.  The employer therefore should put some procedures in place to comply with company security rules and best practices.”  

Those practices might include removing access to computer systems and collecting building keys and employee badges.

“With the majority of non-essential physical workplaces closed, there’s no reason for even current employees to have access to the building unless expressly asked to do so,” Brouwer said. “And because data security is critical for operations, furloughed workers should not have access to company information during period they are not supposed to be working; it can be easily be reactivated when the employee returns from furlough.”

About Nemeth Law, P.C.

Nemeth Law specializes in employment litigation, traditional labor law, management consultation, arbitration, mediation and workplace investigation for private and public sector employers. It is the largest woman-owned law firm in Michigan to exclusively represent management in the prevention, resolution and litigation of labor and employment disputes.