furloughs vs layoffs

Furloughs vs. Layoffs

 Furloughs Temporary Layoffs Permanent Layoff/Termination
Definition of Furlough/Layoffs both Temporary and Permanent A temporary unpaid leave of absence, employees retain their benefits and jobs. When the furlough period ends, employees go back to their same jobs with the same pay and benefits. An employer may specify if PTO may or may not be used during the leave. Employment is ended and treated as a separation or termination. Employment is ended and treated as a separation or termination.
There is an expectation for rehire or reinstatement after the COVID-19 crisis has ended. There is NO expectation for rehire or reinstatement after the COVID-19 crisis has ended.
Benefits From Furloughs vs. Layoffs An employee can continue on benefits coverage during furlough leave. The employee is expected to continue paying for monthly premiums for benefits during leave. The employer would establish an agreement with an employee to set up a monthly billing arrangement with the employee. In this situation, since the employee is terminated (even if temporary), benefits coverage ends the last day of the month. A termination does trigger a COBRA qualifying event. Optional: Employers can help cover the cost or portion of COBRA. Benefits coverage ends the last day of the month. A termination does trigger a COBRA qualifying event. Optional: Employers can help cover the cost or portion of COBRA.
Note: Health insurance carriers are making provisions under these circumstances, so check with individual carriers.  BENEFITS: Check with insurance carriers since you may be able to set up a Rehire Provision that would waive the waiting period should you rehire any of the laid-off employees.
Unemployment Insurance Employees in all categories are eligible for state UI. See state UI for details.
Applicability of FFCRA  Yes, since they remain an employee, they are eligible to receive these benefits if the employee meets eligibility requirements under the Act. Since the employee is no longer employed, they would not be eligible to receive EFMLA or EPFL under this Act. Since the employee is no longer employed, they would not be eligible to receive EFMLA or EPFL under this Act.
Note: Still waiting on DOL for final guidance on the application of FFCRA.
Separation and Severance Pay Not applicable since the employee is not separating from the company. Check state laws for final pay requirements. Check state laws for final pay requirements.
Check state law and company policy on paying out accrued PTO. Check state law and company policy on paying out accrued PTO.
Optional: Employer can initiate separation & release agreements if applicable. Option to offer severance pay but not required, and may not be advisable since it’s considered a “temporary” layoff. Optional: Employer can initiate separation & release agreements if applicable. Option to offer severance pay but not required.
Tax Credits under FFCRA Employers are eligible for a 100% refundable payroll tax credit on the wages paid for leave. Health insurance costs are also included in the credit.
The tax credits would be administered by the IRS and be creditable against employer-side payroll tax liability, with any excess refunded to the employer.
Tax credits for COVID-19 related pay sunset on December 31, 2020.
IRS Release: IRS and DOL Announce 2 New Payroll Tax Credits

Recruiting Trends in 2021

Recruiting Trends in 2021 The pandemic has impacted many aspects of recruiting strategies, including attracting and hiring the best-qualified talents (from within or outside of

Read More »
Scroll to Top