A furlough is a temporary, unpaid break from work, or a cut in hours, that an employer imposes while keeping people employed. How it is set up changes pay rules for exempt staff, benefits and possibly layoff notice duties.
| Issue | Rule | Practical effect |
|---|---|---|
| Exempt salaried staff | Full salary for any week in which they do any work; no pay required for a week with no work (29 CFR 541.602) | Furlough exempt staff in full weeks, and make sure they truly do no work, including email |
| WARN Act | Employment loss includes a layoff exceeding 6 months and a cut in hours of more than 50% in each month of any 6-month period | A long or deep furlough at a covered employer can require 60 days notice |
| Health coverage | Reduction in hours is one of the events that can give COBRA rights | Decide whether coverage continues and who pays premiums |
| Non-exempt staff | Paid for hours actually worked | No work during furlough time, and no unrecorded “quick checks” |
A manufacturer furloughs its 10 salaried office staff for one full week each over a quarter, on a rotation, and cuts hourly production staff from 40 to 32 hours for 8 weeks. Office staff are told not to log into email during their furlough week. One supervisor answers a vendor call on Wednesday of her furlough week; under the salary basis rule, she is owed her full salary for that week.
With EZTime time-off requests, employees ask for PTO from their phone and managers approve it in one place.
The 20% hours cut for production is well below the 50% that WARN uses for hours reductions, and it lasts 8 weeks, not 6 months, so WARN’s employment loss definition is not met. Health coverage continues at the usual employee contribution. The schedule changes are posted 3 weeks ahead so people can plan, and hours are tracked exactly so the 32-hour weeks are paid correctly.
A furlough is hard news, and how it is shared affects who returns. Tell affected employees directly, before the wider announcement, with the start date, the expected length, what happens to pay, benefits and accrued time off, how to stay in touch, and when they will next hear from you. Put it in writing.
Keep contact during the furlough. A short update every two weeks on the expected return date, even if nothing has changed, reduces the chance people take other jobs. Plan the return too: confirm schedules a week ahead, and plan refresher training if procedures changed while people were away.
A restaurant facing a slow winter reduces all 24 hourly staff from about 32 to 20 hours a week for 6 weeks, instead of laying off 9 people.
The owner explains the plan in person at each shift, gives the dates in writing, and checks whether the reduced hours affect anyone’s health plan eligibility. When business returns in March, all 24 are still employed and back to full schedules within a week.
A furlough is temporary, with an expected return to work. A layoff ends the job, or at least has no set return. A furlough that runs long enough can be treated like a layoff under some laws.
Not for furlough time, unless the employer chooses to pay or the employee uses PTO where allowed. Exempt employees must be paid their full salary for any week in which they do any work.
Often yes, including for partial unemployment when hours are cut, but eligibility and amounts are set by each state.
It depends on the plan and the employer’s decision. A reduction in hours can give COBRA rights if coverage is lost.
There is no single limit, but a long or deep enough furlough can count as an employment loss under the WARN Act for covered employers, and state rules may apply.
Usually yes, unless a policy or agreement limits it. Say clearly in the furlough notice what is and is not allowed.
Time off requests, approvals and the schedule sit side by side, so coverage gaps show up before the week starts.