“What’s the difference between a furlough and a layoff?”
This is a question we’re sheepishly asked by customers who feel like they should know the answer, but don’t.
In a nutshell, here it is:
A furlough is a mandatory suspension of work without pay, but it’s temporary. Employees fully expect to return to work as normal, and they typically retain benefits and employee rights during the furlough.
Layoffs are considered permanent. The employee is effectively terminated.
A lot of companies furlough employees during cyclical downturns. For instance, seasonal businesses ramp up at certain times of year, furlough employees when the season is over, and often rehire those same employees the following year.
The government is also notorious for furloughing employees during shutdowns. That system has been fraught with error, however. There have been lawsuits typically awarded in favor of employees.
So if your company is considering furloughing employees to get through the #covid19 crisis and the associated ripple effects, make sure you consult your attorney first so you do it the right way.
