Bourgon HR Blog: HR Advice & Outsourcing Tips for Small Companies

HR Legal Compliance: Do You Understand Furloughs?

Posted on Wed, Nov 16, 2011

hr legal compliance furloughsA furlough, typically defined as a temporary layoff for work, is often considered by employers as a layoff alternative. It's important to understand exactly what a furlough is -- and how it's implemented -- in order to maintain your hr legal compliance.

Furloughs allow employers to keep people employed and maintain institutional knowledge during a time of financial hardship. They can result in much-needed cost savings without having to incur financial and emotional costs of layoffs and can leave an organization better prepared to take advantage of an anticipated upswing in financial performance.

What is a Furlough?

A furlough is either a voluntary or involuntary unpaid leave of absence from employment. In the private sector, assuming that the targeted workforce terms and conditions of employment are not governed by a collective bargaining agreement or individual payment contracts, employers may choose to utilize furloughs as a means to saving money for their company through planned or emergency procedures to reduce payroll costs. This reduction is normally effectuated on an hourly, daily or weekly basis.

How does this differ from layoffs?

Generally a workforce layoff constitutes a group termination and the employees selected to participate in the layoff are usually not expected to return to work; in contrast, furloughs contemplate that the employees will remain with the company but at a reduced labor cost.

How are furloughs implemented?

For private employers there are no special implementation procedures. Rather, furloughs can be planned as a means of saving money or utilized in an unexpected emergency. However, an employer is wise to provide employees with an advanced notice. Many states require such an advanced notice under the general notice requirements of their wage payment laws and some specify amount of notice for their reduction in compensation.

Contact Bourgon HR Solutions if you have any questions regarding the HR legal compliance of your furloughs and layoffs. This will help to protect you from claims of unlawful termination of employment.

Tags: furloughs, hr legal compliance