The impact of Covid-19 continues to have far reaching economic impact on employers. Many employers are contemplating furloughing or laying off workers due to lack of work. But what is the difference in a furlough vs a layoff?
Furlough
A furlough is considered temporary and may include reducing hours or placing some or all employees on temporary forced leave. This is typically not considered a termination and you will still need to provide written notice to affected employees about the changes and that they are likely eligible to apply for unemployment benefits for the lost earnings.
In deciding which positions to furlough its important to document the non-discriminatory business reasons behind the decision to furlough some employees but not others.
Benefits and Retirement Plan Considerations
In addition, you should consider the impact to health and retirement plans. While each plan is different you should check with your broker around any rules requiring a minimum number of hours worked to be eligible for benefits and whether or not employees will need to make contributions to the cost of the continuation.
Layoff
A layoff can be temporary or permanent depending on whether you plan to rehire some or all employees at some point in the future.
A layoff is typically considered permanent if there are no plans to rehire at all, say in the case of a total shutdown of all business operations. Be sure to provide all required notices, including eligibility for unemployment to affected employees.
Pay Considerations
Exempt employees do not have to be paid if they do no work at all for an entire workweek. However, if they work a partial week, they must be paid their full salary for that week.
It’s important to communicate to exempt employees and their supervisors that absolutely no work should be done during this time or they will need to be paid their regular weekly salary.
Communications
In the case of either a furlough or a layoff it is very important that you clearly communicate to employees about their status and any plans to rehire at some point in the future.
Artemiste is committed to helping our clients navigate through these ever changing HR challenges. We will continue to publish updates as they become available and we’re here to answer any questions during the crisis and beyond.
Discover Our Expertise - Artemisteoffers a wide range of Human Resources services to help your business needs. We understand the challenges employers are facing and will work with you to ensure you have the best guidance and tools available. Contact us today for a complimentary consultation
Aisling Byrne, SHRM-SCP, CEBS, CMS, CPLPis the CHRO and CTLD at Artemistewhere creating great places to work is our passion. Ms. Byrne is a frequent contributor to the Artemiste blog on many topics including onboarding, talent development, performance management, compensation planning, employee engagement, total rewards and learning and development.
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