No company wants to announce furloughs or layoffs. It means something has gone wrong financially or economically and a reduction in workforce is necessary. Even when that reduction is temporary, as is the case with furloughs, it can be a challenging time for employees and employers alike.
If you are in a position where you need to announce furloughs as an employer, though, you can take some steps to smooth the transition for your employees. Extending support not only ensures your employees will be taken care of during the furlough – it also means that when they come back to work, they know it is for a company that tried to help them however it could.
What is a furlough?
A furlough is a period of time where an employer mandates an employee to take unpaid leave, often indefinitely, because of the business's financial situation. A furlough is designed to reduce a company's salaries and wages expenses and improve cash flow long enough to stabilize the business.
The COVID-19 pandemic has forced many companies to suspend operations in an effort to contain the spread of the novel coronavirus. For many employees, this has meant furlough. While employees are on furlough, they remain employed with the company but unable to work on behalf of the business.
Can furloughed employees collect unemployment?
Furloughed employees can file for unemployment in accordance with the process laid out by their state government agencies. It is common for furloughed employees to file for unemployment and claim weekly benefits for the duration of their furlough.
During the coronavirus pandemic, the federal government has adopted the Federal Pandemic Unemployment Compensation (FPUC). This measure includes $600 per week in unemployment insurance benefits for all eligible workers in addition to the normal unemployment insurance benefits they would be entitled to under applicable state law. The FPUC payment would not impact eligibility for other public benefits, such as Medicaid, CHIP, SNAP or housing assistance.
Can your employees work while on furlough?
Furloughed employees are prohibited from doing any work on behalf of the company that furloughed them, said Raymond Lee, founder and CEO of Careerminds, an outplacement and career transition company that supports employees impacted by reductions in workforce on behalf of an employer.
"If they're keeping work cell phones and answering emails, there could be legal ramifications," Lee said.
Employees can find part-time or temporary work elsewhere, however, to replace their lost income while on furlough. Although many furloughed employees file for unemployment in hopes of being quickly brought back to work, finding alternative work is a good way for workers to build their skills, develop their careers and network with other professionals.
What is the difference between a furlough and a layoff?
When an employee is furloughed, they are still employed by the company. Their job remains waiting for them; they are temporarily required to take unpaid leave as the company navigates its financial challenges.
A layoff, on the other hand, is when a company decides to terminate the employment of a worker altogether. Layoffs are also typically financially motivated decisions, but they are permanent in nature. They often come with severance packages, which extend final compensation and benefits to the affected employees.
Oftentimes, when a company announces layoffs, many employees are let go at once. Under the federal Worker Adjustment and Retraining Notification (WARN) Act of 1988, employers planning mass layoffs (50 or more employees) or workplace closures must provide 60 calendar days' notice to employees. [Read related article: Small Business Guide on How to Decide When to Lay Off Employees]
What are employers legally required to do when furloughing employees?
When placing employees on furlough, you need to keep some legal requirements in mind. While these rules are relatively broad, it is important to follow the letter of the law when furloughing employees. This includes providing the required information to employees and abiding by state laws.
"Obligations created by law are limited," said Kara Govro, senior legal editor and analyst at Mammoth HR and ThinkHR. "Employers will need to provide employees with information about continuation of any health benefits (i.e., COBRA) if they become ineligible due to reduced hours. In many states, employers will also need to provide employees with notice of their right to file for unemployment insurance, and in at least one state (Georgia), employers are required to file on employees' behalf."
Although the legal requirements surrounding furloughs aren't excessive, it's best to think beyond compliance when it comes to supporting your employees. If a prolonged furlough is beginning to look like a permanent termination, according to Govro, your best option is to be straightforward with your employees.
"From an ethical and best-practice standpoint, employers have the responsibility to let employees know if they have decided not to bring them back," she said. "If there's a high probability that you won't bring someone back, you should let them know as soon as possible so they can start planning for their next opportunity."
Many employers want to go the extra mile, however, and offer their furloughed employees reassurance and support.
5 ways for employers to support furloughed employees
The COVID-19 pandemic has created significant challenges for employers and employees alike. As revenue streams grind to a sudden halt for many businesses, furloughs and layoffs have become commonplace. Even once the public health crisis subsides, the economic impact of the coronavirus pandemic will linger.
For employers forced to announce furloughs, though, it is important to provide support to employees who find themselves out of work for the time being. Following these five ways to support your furloughed employees could pay off with increased morale, productivity and employee retention when it is finally time to come back to work.
1. Put together a furlough package.
A furlough package includes all the information an employer can provide to an employee about why they are being furloughed. It is also an opportunity to develop clear expectations around communication and support throughout the furlough.
"Just like a new-hire package, it will contain information from the [employer] explaining why the furlough is happening, who is going to be furloughed, when the furlough starts, and in what form and how often they plan to communicate with employees during their time off," said Jack Whatley, a recruiting strategist and author of The Human Code of Hiring: DNA of Recruitment Marketing.
Furloughed employees are initially going to want information above all else. A furlough package serves as a comprehensive resource with the insight they need to plan for the immediate future. Also include a letter explaining that the employee is being furloughed, Whatley advised.
"The employer should write a formal letter stating that your employee is being furloughed, [which makes] qualification for services like unemployment, rent renegotiations and reduced bills easier," he said.
2. Provide unemployment insurance application assistance.
The first stop of many furloughed employees is the unemployment insurance office (or website). Dedicating company resources to help your furloughed employees through what can be a challenging process and a difficult time will help ease the burden for them.
"Remain knowledgeable about the status of the unemployment insurance system in your state," said Eric Mochnacz, an HR consultant with Red Clover. "With the number of people applying for unemployment, those systems are overloaded, and the unemployment divisions are shifting their schedules and making changes to the process to deal with the overwhelming amount of claims. Your furloughed employees may call you with questions, so understanding these changes could be a way you can offer support to your employees."
Assigning a human resources staff member who is well acquainted with state unemployment laws and the application process can streamline the filing process and help employees get their unemployment benefits more quickly.
3. Offer EAP resources to furloughed employees.
Being furloughed is stressful. Extending an Employee Assistance Program could be a way of showing your employees you care about their mental and emotional health and want to support them. An EAP is a voluntary program provided through an employee's workplace that connects them with free counseling services to address myriad topics, including mental health, emotional well-being, substance abuse disorders, stress and family issues.
"Every medium-to-large business should have an EAP program set up," Lee said, adding that an EAP is important to non-furloughed workers as well. "Companies need to provide support internally for employees to be productive and have certain resources onsite to help staff cope with stress."
4. Connect employees with local assistance programs and organizations.
Provide employees with information about local assistance programs and organizations, such as food banks, that they could rely on for additional support.
"Employers who want to be helpful should do the legwork to assemble an assortment of resources into a single document, webpage or email that employees will have easy access to, even while furloughed," Govro said. That document should include links to government websites, local charities, and the contact information for people at your company who can answer employees' questions.
5. Stay in communication with furloughed employees.
No matter what, regular communication with furloughed employees is a must. An empathetic approach and frequent updates will go a long way in easing employee fears, said Govro.
"Furloughed employees will have anxiety about when and if they will ever be returned to their jobs – employers have the power to help just by keeping in touch," she said. "I recommend sending an update weekly at a designated time. Even if your update only says, 'We have no new information since last week,' employees will feel like they have some insight and can better plan their next week of groceries and unemployment insurance claims."
Tips for furloughed employees
If you are an employee who has been subject to furlough, you can do a few things to improve your circumstances while you wait for your employer to bring you back to work. Here are the primary steps you should take while on furlough to keep yourself afloat financially and to continue developing your skills and career.
- File for unemployment insurance benefits. Unemployment insurance benefits are a lifeline to furloughed employees who find themselves without an income. Filing for unemployment insurance benefits should be your first step when you receive news of a furlough.
- Attempt to renegotiate financial liabilities. When you are furloughed, you might be able to work out a payment plan with debtors or bill collectors. Contact your landlords and utility providers to see if you can delay a portion of your next payment. In addition, call your bank to see if it can help you reassess your financial obligations until the furlough ends.
- Explore learning resources to develop your skill set. You can explore learning opportunities to develop your skill set or learn something new while you're on furlough. If your employer did not provide access to any particular learning platform, check out free resources online, like Khan Academy and YouTube, that can help you develop a skill.
- Network with other professionals. With video conference platforms, networking with other professionals is easier than ever. Even when you're stuck indoors, as many furloughed employees are during the COVID-19 pandemic, networking is still an opportunity worth exploring. Whatever your field, explore webinars and conferences available to you. Many in-person events are now fully digital as a result of the pandemic.
- Establish a side gig. A side hustle is a good way to keep yourself occupied with something you enjoy doing while potentially earning additional money. Whether you are interested in handmade products you could sell on platforms like Etsy or you have a service to offer, like writing, you could quickly start a side gig while on furlough.
While a furlough is never ideal, using the time to explore new skills and think about your career in a new way could be valuable when you return to work. If you find yourself on furlough, try not to despair. Instead, ask yourself, "What can I do to make this challenging time more productive for myself?"
How to bring furloughed employees back to work
If you're an employer, there will hopefully come a time when your business can support furloughed employees returning to work on a full-time basis. When that time comes, it is important to take the proper steps as an employer. Here are a few things you could do to make the transition back from furloughed to full time a bit more comfortable.
- Treat the return like onboarding. When bringing furloughed employees back after an extended period away from the workplace, act as if you are onboarding a new employee. This should include a brief retraining and an update on company policies.
- Schedule one-on-one meetings. After your furloughed employees are called back, it is wise to hold one-on-one meetings to allow them to discuss their feelings. Give them an opportunity to air concerns or grievances if they want to. Be ready to answer their questions openly and honestly.
- Offer flexible scheduling arrangements. When employees are first coming back from furlough, their personal lives might be hectic. Understand that it is not easy to return from an extended period of unpaid leave. Give your employees the flexibility to return in a way that is convenient for them to help ease their transition back into the workplace.
- Reinforce company culture. After being gone for some time, employees returning from furlough might feel isolated from the rest of the team or outside of the company culture. Look for opportunities to reinforce company culture and reintegrate returning employees to the larger team. Consider a welcome-back potluck or a team-building exercise.
Furloughed employees returning during COVID-19
For employees who were furloughed during the coronavirus pandemic, employers should go to great lengths to demonstrate that cleanliness and health are top of mind when work begins anew. Lee recommends placing hand sanitizer throughout the workplace, requiring employees to wear face masks on the job site and maintaining proper social distancing at all times.
"We don't have a cure, and employees are going to be hesitant to come back to work," Lee said. "They're going to say they're not comfortable because they could catch the virus from someone who is asymptomatic. You really need to put some workplace safety practices in place so that when employees come back, they see you're going above and beyond to create a work environment that's keeping them safe."
Furloughing employees is never ideal. However, when it is a necessity, employers have a responsibility to demonstrate that they are there to support furloughed employees and communicate updates clearly and regularly. This will show furloughed employees that they are still an important part of the company and that the company is doing everything it can to bring them back to work quickly.