Furlough Versus Layoff: A Distinction Without a Difference?

The Coronavirus crisis has forced many employers to reduce or eliminate their work force for the foreseeable future.

Some employers are characterizing such action as a temporary “furlough.”  Others are framing such action as a “lay off” for the time being, until the calamity passes. Yet, for California businesses forced to cut back under the current health emergency, is there really a difference between the two? Answer: it depends.

Typically, a “furloughed” worker: ● remains the company’s “active” employee (although not actually working); ● maintains his/her seniority; ● and, depending on the employer’s workplace policies and plans, continues to receive any applicable vacation/PTO benefits, health coverage, and retirement plan benefits.

On the other hand, an employee temporarily laid off is considered no longer with the company and must be formally reinstated with new hire paperwork. Unlike a “furloughed worker,” the laid-off employee must receive all final wages immediately on the last date of employment, including accrued unused vacation or paid time off (PTO) hours. An employer’s failure to do so triggers additional “waiting time penalties” until full wages are paid in an amount equal to the employee’s daily regular rate up to a total of 30 calendar days.

However, the California Division of Labor Standards Enforcement (DLSE) imposes one key requirement for an employer to maintain the distinction. Unless management specifies a “furloughed” worker’s return-to-work date that is within that person’s current pay period or within ten days, whichever is shorter, management must pay that employee all wages on his/her last day regardless of how the company characterizes the departure, furloughed or laid-off.

See also:

• Workplace Safety Nets (March 27, 2020)
• Federal Coronavirus Workplace Relief (March 23, 2020)
• Telecommuting in Response to Coronavirus Outbreak (March 18, 2020)
• Holding Firm (March 19, 2020)

For further information on how to properly conduct furloughs or layoffs or any other Coronavirus workplace concerns, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

March 28, 2020