Furloughed Workers in the time of COVID-19
What is a furlough?
In the wake of business shutdowns and industry disruptions due to the COVID-19 pandemic, employers are attempting to deal with reduced revenue by reducing expenses. For some employers, this may mean laying off many or all of their employees. But some employers may choose to furlough their employees instead. A furlough puts employees on temporary unpaid hiatus or leave of absence for a, potentially indefinite, but specified period of time. The idea during this pandemic is that eventually, businesses will be able to reopen, and when they do, they will want to have their old employees back.
Can they do that?
Yes, in Texas, workers have very few protections. Most Texas employees are at-will, which means your employer can fire you for any reason—a good reason, a bad reason, or no reason at all—as long as it is not an illegal reason (race, gender, disability, etc.). Unless you have an employment contract that specifies how long you will be employed and for how many hours each week—and these are rare in most employment situations in Texas—your employer can furlough you by partially or completely reducing your hours.
What does it look like?
Furloughs are usually temporary. Sometimes, it comes in the form of reduced hours, which allows the employee to continue working at a reduced schedule while still potentially accruing PTO and vacation time, if offered, and while still potentially receiving other benefits, such as health insurance. Or, the furlough might be a total reduction of hours for a defined period of time, meaning the employee does no work (and receives no pay) for potentially months at a time, with the understanding that the employer will eventually invite the employee to return to work when things return to normal. Whether you are able to maintain your benefits, namely health insurance, during a complete furlough probably depends on your employer and your health insurance plan.
Is my furlough different if I’m hourly or salaried?
Yes, furloughs for hourly (nonexempt) employees are pretty simple: you must be paid your hourly rate for all hours (if any) that you work. However, during the furlough, if you don’t work at all, you are not paid at all.
If you are salaried (exempt), and properly classified, your furlough may be more complicated. You must be paid your full salary for any work week in which you perform work. Thus, it is unlikely your employer will furlough you by reducing your hours in a week; as a result, they are more likely to have you not work at all for weeks at a time. Your employer will likely be very strict with you about doing any work at all—even just checking email or taking a phone call—during furlough periods. But if your employer has you do any amount of work, you must be paid your full salary for that entire work week.
Why furloughs instead of layoffs?
For the employer, the advantage of a furlough during the pandemic is that the industry disruptions and business shutdowns are expected to be temporary, so most employers would prefer to keep employees on payroll and bring them back once the companies can operate normally again, rather than lay them all off and have to rehire and retrain an entire workforce. This also avoids paying severance or potentially higher unemployment insurance premiums. Also – there may be federal legislation on the way that benefits employers who furlough instead of layoff employees.
For the employee, obviously reduced or completely eliminated hours are not ideal. However, a furlough may be preferable to a layoff because it gives them additional flexibility. If totally furloughed, that is, not working any hours at the current employer, they can look for alternative work in the meantime, with the prospect of their old job waiting for them if nothing else pans out during the furlough. Additionally, employees may qualify for unemployment benefits in the interim, too. And if only partially furloughed, some amount of work and income is probably better than no work or income. However, this potentially comes at the cost of any severance payment the company might have offered in the event of layoffs, though in Texas, severance payments are not required, and might not have been paid regardless.
Should I apply for unemployment benefits?
Yes! Apply for unemployment immediately. There is no downside or penalty to applying for unemployment, other than the time and potential frustration you will spend and incur in completing the application and dealing with a system that is quickly becoming crowded.
If you are furloughed, your hours may have been reduced enough to render you at least partially unemployed and eligible for unemployment benefits. This is almost certainly true if you have been totally furloughed—if your employer has totally suspended your work hours for a period of time. However, even if you are still working a small number of hours, you may still qualify for partial unemployment benefits. Your best bet is to apply, provide all the information you can, and see what benefits you qualify for!
Ideally, your employer provided you with the necessary information to complete your unemployment benefits application. If not, you may need to request some information from the employer. You can apply online at https://twc.texas.gov/jobseekers/unemployment-benefits-services, which includes guides and information on applying.
Should I talk to a lawyer?
It may be helpful to talk to an experienced employment attorney about your legal options and some practical next steps you can take.
* Nothing in this blog post is, should be considered, or should be substituted for legal advice. If you need legal assistance, consult with a lawyer.