The coronavirus pandemic has triggered an unprecedented surge in layoffs: In the past month, as an increasing number of states ordered all nonessential workers to stay home, a record 22 million Americans have filed for unemployment benefits. But in lieu of layoffs, many major companies bracing for a deep economic downturn have decided to furlough employees. But what does a furlough mean, exactly — and how is it different from being laid off?
What is a furlough?
In short, a furlough is an employer-mandated, temporary unpaid leave from work, which employers typically resort to as a cost-saving measure. Both public and private employees can be placed on furlough. (Government employees are often put on furlough during shutdowns.) But the specific terms of a furlough depend on where you work. You can be furloughed for as short a time as a few weeks, or as long as months. During this leave, you’ll likely retain your health-insurance benefits, though that’s not guaranteed.
How is it different from a layoff?
If you are furloughed, you technically retain your job, whereas if you’re laid off, you are no longer employed at your job. However, furloughed workers still typically qualify for unemployment benefits, which have expanded under the $2 trillion coronavirus relief package.
“Unlike layoffs, furloughs reduce labor costs without adding new costs such as severance packages and outplacement services,” Jie Feng, an assistant professor at the Rutgers School of Management and Labor Relations told the Society for Human Resource Management. (Employers aren’t required by federal law to offer severance packages during layoffs, though it’s not uncommon.) And when business is on the upswing again, “employers do not have to pay for recruiting, selecting, socializing, and training new employees because the furloughed workers can pick up where they left off.”
Which companies have announced furloughs?
As the country reels from the economic toll of the coronavirus pandemic, various companies have announced that they’re furloughing employees: Macy’s, Kohl’s, and the Gap have announced that they would be placing the majority of their staffs on furlough, joining a growing number of retail companies, such as Everlane and Nordstrom, to do so. Earlier in March, Marriott placed tens of thousands of employees on furlough. National newspaper publisher Gannett, which oversees titles like USA Today and the Des Moines Register, recently told many staffers they would be furloughed for five days a month through June. On March 22, W magazine also furloughed much of its print staff as it postponed its next issue indefinitely. AMC Theatres, which closed all of its locations in early March, has laid off and furloughed approximately 26,000 people across the country, as well as 600 or so additional corporate employees. Simon Property Group, the country’s largest mall owner, laid off some of its workers and put another 30 percent on furlough last week.
In early April, Under Armour announced that it would furlough 6,600 retail and distribution workers, maintaining benefits for those who were eligible. Last week, Ralph Lauren announced that retail employees in closed stores, plus those who can’t do their jobs from home, would be furloughed — with benefits for eligible workers — until June 1. This week, Disney announced it was furloughing 100,000 theme park and hotel workers.
Furloughs have even come for health-care workers in areas experiencing coronavirus outbreaks, as many hospitals have canceled elective procedures, in turn hurting revenues. The list goes on and on — and is almost certain to keep growing.
This article has been updated.