The following is a simplification of complex legal concepts and does not contain all applicable legal considerations or requirements. Consult legal counsel for specifics.
What is the difference between a furlough, layoff and termination?
A furlough involves a reduction in scheduled work and corresponding pay. Furloughs can be imposed by employers for some or all employees as an alternative to layoffs by “burden sharing” among employees and their employer.
A layoff is a separation of the employment with some potential of return. Employees may receive unemployment insurance (UI) benefits while laid-off. Employer can opt, but are not required, to subsidize or maintain certain benefits (e.g. health insurance or seniority).
A termination is a complete end to the employment relationship. Employees lose all benefits (other than continuation coverage under COBRA) but may receive UI benefits.
What are some factors employers should consider?
- Workforce needs in short term (6-12 weeks)
- Financial outlook and ability to meet payroll obligations now and for next 6-18 weeks
- Need for retention and future ability to re-hire or “staff back up”
- Federal and state assistance for businesses (e.g. FFCRA tax credits)
- Federal and state assistance for employees (e.g. UI benefits)