Furlough laws let an employer temporarily suspend or cut your hours without ending your employment, but they also set firm rules on how you must be paid, what benefits continue, and when a furlough legally becomes a layoff. The rules turn on whether you’re hourly or salaried, how long the furlough lasts, and, for some workers, what visa you hold.
Furlough or Layoff: Why the Difference Matters
A furlough is temporary. You stay on the employer’s books with a defined or reasonably expected return date, keep your seniority, and are expected back. A layoff is a permanent or indefinite separation with no guaranteed right to be rehired.
Benefits usually follow that same split. Employers often keep health coverage running during a furlough and stop it at a layoff, with continuation available only through separate programs like COBRA. But the line can shift. Federal law treats any furlough or temporary layoff that stretches past six months as an “employment loss,” which effectively reclassifies it as a layoff and brings additional legal consequences for the employer.1Office of the Law Revision Counsel. 29 U.S. Code 2101 – Definitions, Exclusions From Definition of Loss of Employment
How You Get Paid Depends on Your Classification
The Fair Labor Standards Act splits employees into non-exempt (typically hourly) and exempt (typically salaried), and the two categories are treated very differently on a furlough.2U.S. Department of Labor. Fact Sheet 70 – Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues
If you’re hourly, you get paid for the hours you actually work. Cut from 40 hours to 20, your paycheck reflects 20. Furloughed for a full week, you receive nothing. The FLSA does not require pay for hours a non-exempt employee didn’t work.2U.S. Department of Labor. Fact Sheet 70 – Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues
Salaried exempt workers are different, and this is where employers get themselves into trouble. An exempt employee must receive their full predetermined salary for any week in which they perform any work at all.3eCFR. 29 CFR 541.602 – Salary Basis Any work. Check one email, respond to one text from a coworker, dial into a five-minute call, and your employer owes you the full week. The only way to lawfully avoid paying an exempt employee during a furlough is to structure it in complete workweek blocks in which the employee performs zero work.2U.S. Department of Labor. Fact Sheet 70 – Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues Federal regulations specifically prohibit salary deductions for absences caused by the employer or the operating needs of the business.
The practical rule for a salaried exempt employee on furlough: do not perform any work during a furlough week unless your employer has agreed to pay your full salary for that week. Even a quick glance at your inbox can create a pay obligation the employer may later dispute.
Whether Your Employer Can Force You to Burn PTO
Federal law lets employers require exempt employees to use accrued paid leave during furlough days. The Department of Labor has confirmed that an employer can substitute or reduce an exempt employee’s accrued leave balance for furlough time, and can even run the balance negative, so long as the employee still receives their full predetermined salary in any week they perform work.2U.S. Department of Labor. Fact Sheet 70 – Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues For hourly workers, the FLSA doesn’t regulate PTO banks at all, so an employer can similarly require you to use accrued vacation to cover furlough days.
You could come back from a furlough with no vacation time left. If your employer directs you to exhaust PTO before moving to unpaid status, that’s generally lawful under federal law. State laws or a written employment contract may limit it, so check anything you’ve signed.
Health Insurance and COBRA
No federal law forces a private employer to keep your health insurance running during a furlough. Many do because they expect you back, but it’s discretionary. If coverage continues, you may still owe your share of the premium, and some employers require you to pay it directly while you’re in unpaid status rather than through payroll deduction.
If the furlough causes you to lose coverage under a group plan that stays active for other employees, that reduction in hours is a COBRA qualifying event.4Office of the Law Revision Counsel. 29 U.S. Code 1163 – Qualifying Event COBRA lets you continue the same group coverage by paying the full premium yourself, up to 102 percent of the plan’s cost (the 2 percent covers administration).5U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Employers and Advisers That total includes the share your employer used to pay, which is why COBRA premiums can be startling.
One boundary: COBRA only works if the group plan still exists. If the employer terminates the plan for everyone, there’s nothing to continue, and you’ll need coverage through the Health Insurance Marketplace or another source.
Filing for Unemployment
Furloughed employees are generally eligible for state unemployment insurance because you’re out of work through no fault of your own. You don’t have to be formally terminated. In most cases you can file a claim on or after the first day of the furlough.6U.S. Department of Labor. Unemployment Compensation for Federal Employees Fact Sheet Most states impose a one-week unpaid waiting period.
If your hours are cut rather than eliminated, partial unemployment may be available. States calculate it differently, but the framework subtracts a portion of your reduced earnings from your normal weekly benefit. Many states apply an “earnings disregard” so part of your income is ignored and you still receive something. Some states also run formal work-sharing programs that pay prorated benefits when an employer cuts everyone’s hours instead of laying people off.
Weekly benefit amounts, application rules, and duration all depend on the state where you worked. If your employer later gives you retroactive back pay for the furlough weeks, expect to repay any unemployment benefits you collected for that same period.
When the WARN Act Applies
The federal Worker Adjustment and Retraining Notification Act requires employers with 100 or more full-time workers to give at least 60 calendar days’ advance written notice before a mass layoff or plant closing. A furlough expected to last six months or less generally doesn’t trigger WARN. The statute defines “employment loss” as a layoff exceeding six months or a reduction in hours of more than 50 percent during each month of any six-month period.1Office of the Law Revision Counsel. 29 U.S. Code 2101 – Definitions, Exclusions From Definition of Loss of Employment
A short furlough that gets extended past six months can be reclassified as an employment loss, and the WARN notice requirements can apply retroactively. The employer avoids liability only if the extension resulted from business circumstances that weren’t reasonably foreseeable at the outset and it gives notice as soon as the extension becomes necessary.7U.S. Department of Labor. Worker Adjustment and Retraining Notification Act Frequently Asked Questions Employers with fewer than 100 full-time employees aren’t covered by federal WARN, though some states have their own mini-WARN laws with lower thresholds. Contracts and collective bargaining agreements may add their own notice or consent requirements.
H-1B Workers Can’t Be Furloughed Without Pay
If you hold an H-1B visa, a furlough creates a problem your U.S.-citizen coworkers don’t face. Federal regulations prohibit “benching” H-1B workers by placing them in an unpaid, nonproductive status because of the employer’s decision. When an H-1B employee has no work to do because the employer has none to give, the employer must still pay the full required wage.8eCFR. 20 CFR 655.731 – What Is the First LCA Requirement, Regarding Wages This holds even if every other worker in the company is furloughed unpaid.
The only exceptions are nonproductive time caused by the employee’s own choice or personal circumstances, such as voluntary travel or a medical condition. An employer-initiated furlough is not one of those exceptions.8eCFR. 20 CFR 655.731 – What Is the First LCA Requirement, Regarding Wages To stop paying an H-1B worker, the employer must formally terminate the employment relationship and notify U.S. Citizenship and Immigration Services to cancel the petition, which also ends the worker’s visa status.
Can You Work a Second Job While Furloughed?
No federal law bars private-sector employees from taking another job during a furlough. You’re not being paid and not performing work for your employer, so you’re generally free to earn income elsewhere. Read your employment contract, any non-compete, and company policy first. Some employers restrict outside work, and violating those clauses can give the employer grounds to convert your furlough into a termination.
Federal employees face tighter limits. Even on furlough, they remain government employees and must follow ethics rules on outside employment. Some agencies require prior approval, and some activities are prohibited outright regardless of furlough status.9U.S. Office of Personnel Management. Guidance for Shutdown Furloughs
Income from a second job can also affect your unemployment. Most states reduce your weekly benefit based on reported earnings, though the earnings disregard may let you keep some of both.
Discrimination and Recall Rights
Every federal employment law that protects you on the job continues to protect you on a furlough. Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and other equal employment opportunity laws don’t pause because your paycheck did.10U.S. Equal Employment Opportunity Commission. What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws They apply to who gets furloughed, how long the furlough lasts, and who gets recalled first.
Employers recalling workers must use objective, nondiscriminatory criteria. Bringing back younger workers before older ones, or recalling employees of one race while leaving others out, exposes the employer to discrimination claims. If an employer uses a furlough as cover for a targeted termination, furloughing one person and never recalling them while bringing back everyone else in similar roles, the affected employee may have grounds to sue.
The expectation of returning is what makes a furlough a furlough, but it isn’t a legal guarantee. An employer can convert a furlough into a permanent layoff if business conditions don’t improve. When that happens, the six-month WARN threshold and any state notice laws come back into play.7U.S. Department of Labor. Worker Adjustment and Retraining Notification Act Frequently Asked Questions
What a Long Furlough Does to FMLA Eligibility
The Family and Medical Leave Act requires 12 months of employment and 1,250 hours of work in the preceding year before you’re eligible for protected leave. Furlough time doesn’t count toward those 1,250 hours because you aren’t performing work, so a long furlough can push you below the threshold and cost you FMLA eligibility when you return.
During the furlough itself, FMLA leave generally isn’t available because there’s no work schedule to take leave from. If a serious health condition develops while you’re furloughed, the leave protections don’t apply until you’re back on an active schedule. Employers also cannot count FMLA time against your entitlement for weeks you were furloughed, since the two are treated separately.