While some are able to work from home during the coronavirus pandemic, other people simply don't have jobs that allow for that.
Many people are in industries that are still working. However, the economic impact of the pandemic has wreaked havoc on many of these industries. And other industries are being forced into temporarily closing to better contain the spread of coronavirus.
What happens to employees in these industries? Some may be laid off, some may still have to work and continue exposure to the virus. But some companies may instead suspend the work of most of their employees, sending them home without pay in what's called a furlough.
Furloughs have already begun in particularly vulnerable industries. The airline industry has been in freefall as demand has shrunk; Virgin Atlantic has required employees to take eight weeks of unpaid furlough. As many hotel chains close to help contain the spread of coronavirus, Marriott has begun furloughing what could become tens of thousands of employees.
Different sorts of furloughs have happened recently, perhaps most notably the government shutdown that began in late 2018 and extended into 2019 that furloughed hundreds of thousands of government employees.
Here is what's happening and why.
What Is a Furlough?
An employee furlough is a mandatory suspension from work without pay. It can be as brief or as long as the employer wants.
Furloughs can take place in both public and private institutions. An organization will furlough employees as a cost-saving measure when it doesn't want to lay off staff but lacks the resources to continue paying them.
Public employee furloughs have brought the issue to mainstream consciousness during periodic government shutdowns since the 1980s. When the federal government shuts down it can furlough anywhere from several hundred thousand to potentially over a million employees.
Public vs. Private Furloughs
A private business might furlough its employees during a short-term or cyclical downturn. Seasonal businesses, for example, may furlough their employees during their slow months. Or a shop owner may do so in between orders, choosing to furlough employees he can't afford while trying to drum up new business.
More recently, General Motors furloughed thousands of employees amid a United Auto Workers strike.
In the case of the federal government, furloughs occur when it fails to authorize new spending.
The federal government has an annual appropriations process. This requires Congress to create and pass a budget that authorizes its spending for the next fiscal year (although Congress can pass a budget for as short or long a period as possible). If Congress fails to pass a budget, it fails to fund the agencies which rely on this process. They don't get the money necessary to pay their employees and, as a result, have to furlough their employees.
No Work Rule
Furloughed employees are absolutely banned from doing any work on behalf of their employer whatsoever.
This is a zero-tolerance rule. A furloughed employee can't so much as take a phone call or answer e-mails. Even five minutes breaks the No Work Rule.
If a salaried employee does any work while on furlough the employer must pay them the equivalent of their salary for the entire day. If an hourly employee works while on furlough the employer must pay them for the time worked.
As a result, furloughed employees typically have their access to work accounts and devices revoked. This is to prevent well-meaning employees from breaking the law and triggering a payment obligation.
Government "Excepted Employees"
During a government shutdown two types of federal employees still show up for work.
The first category is employees who are funded through some other mechanism than the annual budget. The United States Post Office, for example, is self-funded. As a result, post offices stay open through a government shutdown.
The second category is what the government calls "excepted" employees. This refers to employees who are required to keep showing up for work during a furlough because their job relates to health, safety, property protection or some other critical function. Since their agencies have no funding, these employees do not get paid during a shutdown.
Furloughs vs. Layoffs
There are four key differences between a furlough and a layoff.
- Furloughed employees have an expectation that they will return to work. Typically, an employer will give furloughed employees either a specific date or a specific condition for resuming duties.
- Furloughed employees typically retain their benefits. Most notably, employees usually retain access to any health and life insurance during the furlough.
- A furloughed public employee retains their employment rights. Government employees cannot be fired or replaced without process. For a public employee who has been furloughed, rather than laid off, this means that they have a presumptive right to return to that position if they choose and it exists.
- A furlough is relatively seamless. Laying off employees requires significant process, as does hiring new staff. This can be time consuming and expensive. By contrast, a furloughed employee can come and go fairly easily.
An employer typically will use a furlough to retain staff that they can't afford but don't want to lay off.
In the case of the federal government, every agency expects to reopen once Congress can pass a budget. As a result they don't want to lose their staff. Instead of going through the extraordinary expense and disruption of laying off then rehiring an entire staff, agencies furlough. Once the government reopens, employees can show back up to work.
Employee Rights During a Furlough
First and foremost, furloughed employees have the right to seek new employment. For an employer, one of the main risks of this process is that their top talent will get jobs elsewhere.
Many employees consider taking temporary jobs during a furlough. They should check carefully for rules against outside employment and/or second jobs, as their employer is free to enforce these policies even during a furlough.
For public employees, the Office of Personnel Management has specifically stated that "rules regarding outside employment continue to apply when an individual is furloughed." If a suspended employee has questions about those rules, the agency recommends contacting their agency ethics official… who is also probably furloughed.
A furloughed employee may also take unemployment benefits for their time without pay. Since unemployment is paid by states, not the federal government, it will not suffer a budgetary lapse in the case of a federal government shutdown.
Not every employee can pursue this option however. Each state has individual rules for collecting unemployment, including (potentially) waiting periods to collect benefits and a requirement that the applicant show an active job search. Either or both of these may disqualify a furloughed worker. Further, furloughed workers who receive back pay for their time away from work will typically have to pay back any unemployment benefits they collected.
Government Pay During a Furlough
Furloughed employees have no automatic right to payment, however, historically Congress has paid all federal workers for the time they lost during a shutdown. While Congress has passed no law assuring workers of their back pay from 2018-19, leadership from both the Democratic and the Republican parties have indicated that they will do so.
All employees required to work during a shutdown are entitled to full back pay.
Contract workers, particularly those hired through third parties to work on government property, are also sent home during a furlough. If the agency which hires them has not yet gotten a budget then it can't employ contractors any more than it can pay its staff. These workers will not receive back pay.
While it is unclear how many contractors, exactly, are affected by a government shutdown, one estimate from the New York Times suggests that it could number over 1 million.
Legality of Excepted Employees
As noted above, the government requires that certain classes of job continue whether or not the employees are getting paid. This includes roles such as air traffic controllers, FBI agents, Border Patrol agents and TSA personnel.
Courts have ruled that this is illegal.
During previous shutdowns, attorneys representing excepted employees have sued the government arguing that this practice violates the Fair Labor Standards Act. Courts have agreed. In 2017 a federal judge awarded double pay to every employee forced to work through the 2013 government shutdown.
At time of writing, two public employees unions have filed suit against the government concerning the 2018-19 shutdown as well. It is highly likely that they will succeed again.