Stimulus Update: Furloughed Vs. Laid Off

With the new stimulus package expanding unemployment benefits, and with businesses struggling to keep employees on payroll, we’re hearing the terms “furlough” and “lay off” a lot.

The two are not synonyms, however, so in today’s post we’re going to dive into the difference between the two and what that means for any potential benefits you may be able to receive.

What is a furlough?

A furlough is an unpaid leave of absence. You still have your job and have not been fired or let go, but you are not working and you are not paid.  Being furloughed is a temporary arrangement, and the expectation is that you will return to your job at some point in the future when the business is able to make payroll again.

What is the difference between being furloughed and laid off?

A furlough is a temporary arrangement, being laid off is not.  When you are laid off, your employment ends as do your salary and benefits. Furloughed employees can return to their job, laid-off workers cannot.

Why do companies furlough employees?

Companies are furloughing employees because they see better economic conditions on the horizon and want to staff up again soon. They do not want to lose experienced, already trained employees.

Do you get paid during a furlough?

No. As a cost-cutting measure, companies do not pay employees while they’re furloughed.

Do you keep your benefits during a furlough?

Generally, yes. But it can depend on the employer, and non-health benefits (like retirement benefits) may be trickier to maintain depending on their terms.

Can you collect unemployment benefits if you get furloughed?

Unemployment insurance is managed at the state level. We do not yet know whether Virginia’s unemployment rules will apply to furloughed workers, however, the federal government’s stimulus bill does extend unemployment benefits to furloughed workers as long as their unemployment is connected to the coronavirus outbreak. Furloughed employees qualify, as do part-time workers, freelancers, independent contractors, and the self-employed.

Am I eligible for the federal government’s $600 weekly payment to unemployed workers if I’m furloughed?

Yes. Congress is extending that $600 weekly check to all individuals eligible for unemployment insurance, the $600 weekly payout lasts through July 31.

How long can a company furlough an employee?

It depends on the company, state rules and regulations and other factors such as collective bargaining agreements for unionized employees. There is not one hard and fast rule about the length of time a furlough can last. Check with your state’s labor department or contact human resources at your company for specific laws and policies. If you are in a union, contact your union leadership for information on the agreements they have in place with your employer.