Companies across the United States are being forced to layoff workers as entire industries are crippled because of the coronavirus pandemic. According to a Marist Poll, nearly 1 in 5 US workers lost their jobs or had their hours reduced as of March 14th. The Economic Policy Institute estimates that 3 million jobs will be lost by this summer. Some displaced workers are being “furloughed” and some are being “laid off.” What is the difference?
A furlough is a temporary suspension of work where the employee usually gets to return to his/her job when the furlough has ended. Furloughed employees are not paid during the furlough period, but typically retain their benefits and employment rights. Furloughed employees can request to use their paid time off and vacation time during the furlough period. In contrast, a layoff is a permanent severing of the employment relationship. Both compensation and benefits cease on the day the layoff becomes effective.
Under both scenarios, an employee may apply for unemployment insurance benefits. With a furlough, the employee will not have to show the state that he/or she is looking for work to collect. That is because the employee technically still has a job.
Furloughs are better for employers in the long run. They won’t have to spend time and effort to replace their workforces when the threat of the coronavirus has lifted. One positive takeaway from a furlough is that the employer is somewhat optimistic about being able to return one this crisis is over. Employees, however, only really understand that they are not working and collecting a paycheck and so a furlough versus a layoff may be a distinction without a difference.
At Schwartz Perry & Heller LLP, our employment lawyers offer aggressive advocacy for employees seeking fair treatment and pay.
Consult with us today by calling (646) 490-0221.