A furlough happens when employers temporarily lay off employees from work, typically without pay.

Oftentimes, furloughs last as long as the employer needs them. With this in mind, employees usually expect to be able to return to their jobs after a certain period of time.

There are a few key differences between a furlough and a layoff:

1. Furloughed employees relieved of their duties with the expectation that the move is only temporary and that they’ll eventually return to work. Depending on the situation, an employer may even provide furloughed employees a specific return date to help them better plan to return to work.
2. Furloughed employees typically retain their benefits while employees who are laid off typically do not.
3. Furloughed public employees retain their employment rights—meaning that when a position is reinstated, they have a right to return to that role if they want and if it still exists.
4. Furloughs are relatively seamless while layoffs require more significant costs and compliance measures.

An employer will typically use a furlough to retain staff that they can’t afford but don’t want to layoff.

The state regulates unemployment, and state laws determine whether a furloughed employee qualifies for the benefits.

Non-exempt, or hourly employees receive pay for each hour they work. If an employer places them on a furlough, they simply receive pay for no, or fewer hours. 

Exempt, or salary employees receive pay for their full salary for any given workweek. Organizations should be careful to structure the leave so furlough doesn’t result in a loss of exempt status.

While there’s no definite answer to this question, furloughs should only be used for short-term solutions.

In our opinion, the maximum amount of time a company should furlough an employee is one year. Even then, they should only be implemented if the company plans to recall the employee within the timeframe. 

Related Terms: Layoff