- Furloughs are a temporary layoff, while layoffs are permanent.
- While laid-off employees are eligible for unemployment benefits, it's not so clear for furloughed workers, as the laws vary by state.
- Employers can help affected workers by providing their employer identification number, the contact information for the local unemployment office and not disputing an unemployment claim.
- This article is for business owners who are facing having to lay off or furlough employees and aren't sure how they can best guide their workers in filing for unemployment, as well as other ways they can support workers.
As the country grapples with the COVID-19 pandemic, many businesses have laid off employees and closed their doors, and other businesses have furloughed workers so they can continue to stay in business.
If you're facing the very difficult decision of having to lay off or furlough your workers, you may not be sure what to do. This article will explain how you can help impacted employees navigate the situation.
How to help laid-off and furloughed employees file for unemployment
For small business owners, layoffs and furloughs may be unavoidable. There are three actions, however, that employers can take to support employees in the aftermath of a layoff or furlough.
The first thing an employer can do to support their workers is to be upfront with them. As a business owner, you may want to obscure your company's hardships, financial and otherwise, from your employees. As difficult as it is, though, be honest with your workers about the challenges the company is facing and the steps that are being taken to resolve the concerns. Honest, direct communication allows your workers to process the events and ask questions.
Second, once you've identified the cuts that need to be made and informed the affected individuals, you'll want to help them as they prepare to file for unemployment insurance.
Individuals who have been laid off are eligible for unemployment benefits; however, for workers who have been furloughed, it isn't as clear. Furloughed workers may be eligible for unemployment, but it is up to the state whether they will be paid unemployment benefits.
To support your employees with filing unemployment, provide them with the physical address and website address for the unemployment office in your area. Give employees your employer identification number as well, as some states require it when a person files for unemployment. On a related note, don't fight unemployment claims. While you have been forced to cut positions to save your business, trying to get out of paying the associated unemployment insurance costs is not the best move in this situation.
Third, give employees the contact information for your HR department or representative. Your workers will inevitably have questions after the announcement that they are being laid off or furloughed. People are in a state of shock when they are informed they are being laid off or furloughed. They haven't had time to ask questions or think about what resources they will need. Additionally, further questions may arise as individuals file for unemployment. Having the name and contact info for an HR rep from your company helps your people more readily and quickly get the short-term resources they need.
Key takeaway: Make sure laid-off and furloughed employees know where they need to go to file for unemployment and what information they will need when doing so, such as your business's employer identification number. Also, leave them with the name and number of your HR representative whom they can contact should they have any additional questions.
How else can you support laid-off and furloughed employees?
Laid-off employees typically lose their healthcare benefits, which is very likely one of their top concerns, so it is important to explain to your workers what their options are for healthcare, including COBRA coverage.
For employees you plan to furlough, you have two options. The first option is that you can continue covering them under your group plan, with furloughed employees continuing to pay their employee contribution. The second option is that you can take the furloughed employees off the health plan for the duration of the furlough, but provide them with the details they will need about how they can obtain COBRA insurance.
An additional way to support employees is through an employee assistance program, if your company is signed up with one. EAPs can connect your laid-off and furloughed workers with resources to help them optimize their resumes and fine-tune their interviewing skills.
Key takeaway: There are several ways employers can help furloughed and laid employees, including by making sure they know their healthcare options, connecting them with EAP resources.
What is the difference between employee furloughs and layoffs?
Furloughs are typically temporary (although they can occur for an undetermined amount of time) while layoffs are permanent. Furloughed employees are still considered technically employed by the organization they work for, and they retain their employment rights and benefits. There is an expectation that at some point furloughed workers will return to work. Employers can require employees to use accumulated paid time off during the furlough, but generally, a furlough is an unpaid leave. Furloughed employees are free to look for temporary employment during the time of the furlough.
A layoff is a full termination, usually for reasons other than employee performance. As a result, employees lose benefits and protections. If an employer is experiencing a downturn or other unforeseen circumstances, mass layoffs can occur, meaning many a large number of employees are let go at the same time.
Key takeaway: A furlough is considered to be temporary leave for workers, while a layoff is a permanent separation.
How does an employee furlough work?
Employers wanting to institute furloughs determine how many positions will be impacted. They then identify which workers are being temporarily eliminated and designate a date for when the mandated unpaid leave will begin.
Once the furlough period begins, those employees who are asked to take unpaid leave cannot do any work for the organization. If they do, the company is required to pay them for their work at the regular rate of pay.
Key takeaway: When an employer decides furloughs are necessary, they need to decide how many positions need to be affected and then identify which specific employees should be put on leave.
How should supervisors complete personal action forms (PAF) to show that an employee is being furloughed?
A PAF is used to report appointments, terminations, as well as other changes involving status and compensation for an employee. Most organizations have their own PAF systems in which HR staff input the necessary info, including effective dates for terminations, layoffs or furloughs.
Can a furloughed employee accept a job with a different employer while they are on furlough?
Furloughed employees are free to search for another job, although some employers might have restrictions on the type of work they look for, such as if the employee signed a noncompete agreement.
Can an employee receive unemployment if they volunteer for a furlough?
Yes, however, each state has its own rules governing who can collect unemployment.
Can an employee use paid sick leave during a furlough?
During furloughs, an employer may put an employee on paid sick leave or have them use personal time off. Before COVID-19, employees could not use paid sick leave while they were on furlough.