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Furloughed vs. Laid Off: What’s The Difference?

Never heard the term furlough before? You’re not alone. In the past, the term “furlough” is something we mostly only hear about during government shutdowns, when federal employees are sent home.

In today’s blog, we’re getting down to the nitty-gritty: what it really means to be furloughed, how that is different from being laid off, why your company might furlough you, and what you should do first if it happens to you. 

Furloughed vs. laid off

When it comes down to the definition, the difference between furloughed and laid off is pretty simple. When you’re furloughed, you’re on temporary, unpaid leave. You can go back to work without being re-hired by the company. 

If you’re laid off, however, you’re permanently separated from your employer. If you were to go back to work for the company, you would have to go through the hiring and onboarding process again. 

What it means to be furloughed

What does this “temporary, unpaid leave” really mean? That when your employer ramps their business back up, they can ask you to resume working for them quickly. 

We realize that the difference between being furloughed and being laid off is tricky. And there are a number of misconceptions. Here are a few of the most common questions we get from hourly employees about what happens when you’re furloughed:

1) Can I collect unemployment when I’m furloughed?

Typically, yes. When you’ve been furloughed, applying for unemployment is one of the first things you should do. But it’s worth mentioning that unemployment benefits are determined by the states, so guidelines vary on a state-by-state basis. You can find all of the resources you need to determine your own eligibility on the Department of Labor’s website

During the coronavirus pandemic, there are also additional benefits available for individuals who typically wouldn’t be covered by unemployment benefits. These are provided by the federal government under the recently passed CARES Act, which has expanded both the monetary benefits and definition of those covered to help Americans recover from financial hardships.

2) Can I look for a new job while furloughed?

100% yes. Being furloughed isn’t a guarantee that you’ll have a job when your employer resumes operations. They can’t tell the future any more than you can, and there is always the possibility that your employer will be unable to reopen or that it will take longer than planned. 

If you have the opportunity to pursue other employment opportunities, you should do so. The simple act of having searched for a new job won’t prevent you from being able to resume work for your previous employer when they are able to offer you hours. Your previous employer isn’t giving you a paycheck, and they can’t reasonably expect you to turn one down.

3) Do I get to keep my benefits?

Most employers let furloughed employees continue their health insurance and other benefits. This gives you continuous health coverage (which is especially important during a global pandemic!) and can help financially when you don’t have as much income as usual. 

When your employer announces a furlough, be sure to ask them about whether or not your benefits will remain. If they are unable to continue benefits, you can sign up for health insurance via COBRA or the Affordable Care Act to ensure you’re covered if you fall ill or get injured.

4) Do I get to keep my seniority/pay rate after the furlough?

The answer to this question is typically “yes!”  Your employer may notify you differently, but one of the benefits of being furloughed, rather than laid off, is that usually you return to the same seniority level and pay rate you were at before you were put on leave. 

Why would my employer put me on furlough?

There are a variety of benefits for employers as well when they furlough employees rather than laying them off. The biggest? Time. Businesses are able to ramp up more quickly when they don’t have to go through the process of hiring an entire workforce from scratch. This is why the hospitality and retail businesses have been partial to furloughing their teams during the coronavirus pandemic. When they’re eventually able to reopen, they want to be able to get back to work, fast.

It can also be less expensive for businesses to furlough their workers - particularly if they are confident that their reduced staff or closure will be temporary. For businesses that would otherwise have to provide severance or outplacement services for their laid-off employees, it’s a less expensive option to cut payroll spend by furloughing those workers instead. As long as they are confident in their ability to eventually get their team working again, a temporary furlough is a better financial option.

What to do first if you’ve been furloughed

First, find out what your employer is still providing. As you likely noticed in the sections above, a lot of the benefits your employer may still provide are up to their discretion. Be sure to ask the following questions:

  • Are you still providing benefits/health insurance?
  • Will taking a temporary job during my furlough impact my employment status?
  • Will my seniority be impacted when we go back to work?
  • Will my pay rate be impacted when we go back to work?
  • Is there a date when my employment will be reevaluated?

The answers to all of these questions can impact your decision on how to act. If you’re offered benefits, guaranteed the same seniority and pay when you get back to work, and absolutely love your job, it may be worthwhile to wait out your furlough, pick up temp jobs  (you can do so through Employbridge!) and/or unemployment benefits in the meantime, and go back to the job you love after the pandemic. 

If your employer isn’t providing you with benefits or any guarantees of seniority/pay, it might be time to cut them loose. Start looking for new job opportunities and updating your resume - more tips here to help you get moving!

The difference between furloughed and laid off can have a big impact on your employment. But either way, temporary job opportunities can help you keep a paycheck coming in. 

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