Furlough and Unemployment in COVID-19

Furlough

A furlough is considered to be an alternative to layoff. When an employer furloughs its employees, it requires them to work fewer hours or to take a certain amount of unpaid time off. For example, an employer may furlough its nonexempt employees one day a week for the remainder of the year and pay them for only 32 hours instead of their normal 40 hours each week. Another method of furlough is to require all employees to take a week or two of unpaid leave sometime during the year. Employers must be careful when furloughing exempt employees so that they continue to pay them on a salary basis and do not jeopardize their exempt status under the Fair Labor Standards Act (FLSA). A furlough that encompasses a full workweek is one way to accomplish this, since the FLSA states that exempt employees do not have to be paid for any week in which they perform no work.

An employer may require all employees to go on furlough, or it may exclude some employees who provide essential services. Generally, the theory is to have the majority of employees share some hardship as opposed to a few employees losing their jobs completely.

However, employees who are on furlough may be eligible for either partial or full unemployment benefits. While on furlough employees may be eligible to collect unemployment benefits. This will be dependent upon them meeting all other unemployment eligibility requirements and on how your furlough is structured. If your furlough is a reduced work schedule, then employees may be eligible for partial unemployment benefits (i.e. a full-time employee working part-time - if they work less than four days in a week and earn $504 or less). If the furlough is for full weeks at a time, then employees may be eligible for full unemployment benefits.

As a furlough is not a separation of employment whether or not your pay out time off benefits will be up to you. You could certainly be flexible and permit this but would not be required to until a decision is made as to whether a lay off (separation from employment) will need to occur.

Sample Furlough Letter.docx

Benefits During Furlough

Retirement and Other Insured Benefits

The Plan documents control. As for PTO benefits, the employer has greater flexibility and ordinarily can modify the policy statements to extend coverage if desired. For employee relations reasons, employers should address this in advance.

Health Insurance

In most instances, you may continue to pay benefits during a furlough. However, we would recommend that you review your Plans documents and confirm with your carrier as Plan terms typically dictate whether active coverage can continue during short-term leaves of absence (i.e. furlough), whether paid or unpaid, and many plans have minimum hour requirements to maintain active coverage. Employers that expand coverage for ineligible employees outside the terms of the plan or policy without consent from the insurer or stop loss carrier face significant financial exposure.

If permitted, you will want to plan how employees will keep paying monthly premiums/contributions to maintain coverage during any leave period.

Some insurance carriers (such as Excellus) are relaxing their guidelines when it comes to employees with reduced hours and their medical benefits. It will be best practice to reach out to your carrier to confirm if they are following standard COBRA protocol for a loss of hours or if they are making exceptions.

Unemployment

Generally speaking, unemployment insurance has traditionally not made the employee more than whole when it comes to their pay. However, under the federal CARES Act, employees may end up earning more than they would have if they were working. The New York State Unemployment Division has released some frequently asked questions - Unemployment Insurance Benefits - Updated FAQs.pdf

Other Unemployment Questions and Answers

Question: What is the maximum benefit I can receive from PUA (Pandemic Unemployment Insurance)?

Answer: Your benefit rate is based on your recent wages. In New York, the current maximum weekly benefit rate is $504. The minimum PUA benefit rate is 50% of the average weekly benefit amount in New York. For January 27, 2020 - March 31, 2020, the minimum benefit rate is $172. For April 1, 2020 - June 30, 2020, the minimum benefit rate is $182.

Question: Will I also receive the additional $600 per week for Pandemic Unemployment Compensation?

Answer: Yes. PUA benefits will include an additional $600 per week until July 31, 2020.

Disclaimer

Much of this information has been sourced from the Pioneer Library System's HR Consultant (April 2, 2020) as well as System staff compiling resources. Your library may need to seek legal counsel to ensure that all applicable employment laws are being followed.