Employee Furlough vs. Lay Offs
Amid the COVID-19 crisis, many employers find themselves weighing their options when it comes to staffing. Two terms that often used interchangeably to discuss an employee’s status are furlough and lay off. Even though the two terms are commonly used in place of one another, each term has a separate and distinct meaning.
A furlough refers to a situation where an employee is put on a mandatory, temporary, unpaid leave from their employment. The employee comes back to work as needed or once economic conditions improve. A furlough can be for a lay at a time, or for a longer period of weeks or months. Furloughed employees are still active employees of the business. An employer may or may not have the option to continue insurance benefits for a furloughed employee. An employer will have to check with the employer’s insurance provider as different insurance policies treat continuing coverage for furloughed employees in varying ways.
A lay off refers to a situation where an employee is permanently, fully separated from employment due to economic conditions. One type of layoff is a reduction in force. In both situations, there is no intent to bring that employee back. The employee is terminated and is no longer an active employee of the business. While an employer would not keep a laid off employee on the company’s insurance because the employee is no longer working for the company, the employee may be entitled to COBRA benefits.
Both furloughed employees and laid off employees may be eligible for unemployment benefits, particularly given the recent expansion of unemployment benefits in connection with the COVID crisis.