BULLETIN
March 18, 2020 (UPDATE)
As we continue through these uncertain times, many companies are dealing with the reality that lower revenue cannot support the current employment. As a result, employers are considering their options to lower payroll expense. We’ve created the following chart that summarizes the options and differences between Furlough and Layoff.
| FURLOUGH | LAYOFF | |
|---|---|---|
| Description | Short-term leave of absence | Employment ended due to lack of work or other business reasons |
| Employment Status | Remains “active” | Changes to “terminated” |
| Employee Benefits | Eligibility likely to continue. Employer can determine method of premium collection. | Eligibility ends – typically on last day of month. COBRA would be offered. |
| Unemployment Claims *subject to standard requirements |
Each state may handle differently. (e.g., Furloughed Illinois residents likely to be approved*) |
Each state may handle differently. (e.g., Laid-off Illinois residents would be approved*) |
| Return to Work | No significant changes or paperwork required. | Employees would complete new hire paperwork (e.g., I-9) and may be subject to new hire waiting period for benefits eligibility. |
Outside of a furlough vs layoff decision, some employers are considering a company-wide reduction in pay (e.g., 20% pay cut for all employees). When reducing an employee’s pay or hours, ensure that you stay compliant in areas such as minimum wage, exempt/salaried employee pay threshold, and benefits eligibility.
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