As we continue through these uncertain times, employers are considering their options to lower payroll expense. We’ve created a chart that summarizes the differences between Furlough and Layoff.
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BULLETIN
March 18, 2020 (UPDATE)
 
FURLOUGH AND LAYOFF
 
 

As we continue through these uncertain times, many companies are dealing with the reality that lower revenue cannot support the current employment. As a result, employers are considering their options to lower payroll expense. We’ve created the following chart that summarizes the options and differences between Furlough and Layoff.

FURLOUGH LAYOFF
Description Short-term leave of absence Employment ended due to lack of work or other business reasons
Employment Status Remains “active” Changes to “terminated”
Employee Benefits Eligibility likely to continue. Employer can determine method of premium collection. Eligibility ends – typically on last day of month. COBRA would be offered.
Unemployment Claims
*subject to standard requirements		 Each state may handle differently.
(e.g., Furloughed Illinois residents likely to be approved*)		 Each state may handle differently.
(e.g., Laid-off Illinois residents would be approved*)
Return to Work No significant changes or paperwork required. Employees would complete new hire paperwork (e.g., I-9) and may be subject to new hire waiting period for benefits eligibility.

Outside of a furlough vs layoff decision, some employers are considering a company-wide reduction in pay (e.g., 20% pay cut for all employees). When reducing an employee’s pay or hours, ensure that you stay compliant in areas such as minimum wage, exempt/salaried employee pay threshold, and benefits eligibility.

Stay up-to-date with the latest material on our coronavirus web page - dedicated to sharing information about COVID-19 and how it relates to the workplace:

https://www.employco.com/coronavirus

We will continue to monitor the situation and provide updates throughout the process. We hope you and your family and friends are healthy.

Please contact us if you have any questions.
 
Questions, comments, feedback?

Robert Griffen Wilson
630.286.7381
gwilson@employco.com
         
  Connect with us   Employco USA  
         
              350 E. Ogden Avenue
Westmont, IL 60559 		 
 

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