COVID-19 Layoffs and Furloughs: Must-Know Information 

Employers everywhere are terminating their employees’ pay and benefits. But they are stopping short of saying they are terminating their jobs. Instead, they tell employees they are being furloughed or temporarily laid off. Why is that? What do those words really mean?

In fact, they have no legal meaning. They leave the employee in a confused state of limbo—and that may suit the employer. Employers who “furlough” employees can act as though they have not cut jobs.  They may be trying to keep their workforces intact and available for rehire rather than seeing them disperse. By dangling a suggestion of possible recall, they inhibit employees from taking self-help steps such as seeking new jobs or retraining for better ones. “Furloughed” employees may hesitate to file for unemployment or file a WARN Act claim thinking it may be a mark against them. The WARN Act provides employees let go without notice in a mass layoff or shutdown up to 60 days’ pay and benefits. But to be eligible, they must have suffered a job loss and not be on a genuine temporary layoff.

Although the federal WARN Act is a notice statue, it does not prohibit employers from characterizing their layoffs using terms such as furloughs.  California’s state WARN Act is clearer. In California, employees let go merely have to go two or more consecutive weeks without work or pay. If they received no advanced written WARN notice of that layoff, they may be considered terminated and entitled to 60 days’ pay and benefits. Outside of California, employees let go in for a period of less than six months may be deemed on a “temporary layoff,” They would have no rights to a WARN Act notice or backpay if, in that scenario, they were given a  “reasonable expectation of recall.” They would have to wait a full six months to be considered to have lost their job. That is harsh.

The critical issue then for most employees who are being furloughed is whether they have been given a reasonable expectation of recall when they are “temporarily” laid off or “furloughed” without a clear return date. If the furlough message is vague and says nothing about how long it will last: such as a “furlough until further notice”, it will be likely be deemed to be a “permanent” termination. It does not give employees a “reasonable expectation of recall,” especially if there is a total cessation of wages and benefits. Courts will also look to the employer’s other communications, its policies and practices, industry standards and other factors. If the business is seasonal one, with recurring breaks that last just a few weeks, the layoff would probably be considered temporary.  If there is no pattern, such as in the pandemic, the layoff would more likely be considered permanent because, in a free-fall, is no basis for a reasonable expectation of recall.

For all practical purposes, many employees are actually being terminated the day their layoff or furlough starts, even if it is presented otherwise. Their employer may  have chosen to “furlough” them rather than terminate them, to avoid an uproar. But under the WARN Act, employees must not be the last to know. They may be entitled to up to 60 days of pay and benefits.  At the start of the layoff, they may also be eligible for payment of all their unpaid wages, including vacation and PTO. They may be entitled to other penalties as well.

To learn more they should speak to an attorney. Raisner Roupinian LLP can represent them, and will speak to them at no charge. Just complete the confidential message form below.