Both layoffs and furloughs are unpaid time off; the distinction being that furloughed employees have a guarantee of returning to their jobs, while layoffs can be made permanent. In the absence of a manual or policy, employers can implement either course, depending on the culture of the company and the anticipated amount of time workforce needs to be reduced.
A layoff is the removal of an employee without any guarantee of returning to work. Layoffs are for longer periods and employees typically do not continue to receive benefits unless they remain on recall list. (at the discretion of the employer) Laid Off employees can apply for unemployment benefits.
Furlough is mandatory time off work for a specific amount of time, typically with no pay. A furlough is temporary, and employees still have their jobs return to work once regular business continues. Generally, employees on furlough continue to accrue vacation time and receive other benefits, such as health insurance. Furloughs are not generally long enough for employees to seek unemployment benefits.
There is flexibility with furloughs at the employers' discretion which can include:
Employers must be careful when furloughing exempt employees so that they continue to pay them on a salary basis and do not jeopardize their exempt status under the Fair Labor Standards Act (FLSA). A furlough that encompasses a full workweek is one way to accomplish this, since the FLSA states that exempt employees do not have to be paid for any week in which they perform no work. https://www.nolo.com/legal-encyclopedia/furloughs-hour-cuts-pay-cuts-33484.html
Quality Business Solutions (QBS) offers an integrated solution to remove the weight of payroll administration from your plate, allowing you to focus your time and resources on growing your business.
Chamber investors receive exclusive pricing on payroll management services. The QBS secure online system provides you and your employees with access to vital payroll information allowing you to run reports, print W-2s and view pay stubs all in one place, any time.