Furlough vs. layoff? As more workers lose their jobs, here’s what to know about your rights and benefits
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Over the weekend Disney began furloughing tens of thousands of employees. This unpaid leave—with no set return date—included staff from Disney World, Hollywood movie studios, as well as employees at corporate headquarters.
These furloughed workers will join the 22 million Americans who have already filed unemployment benefit claims over the past month. Employers say they hope to rehire many of these furloughed workers once the economic storm passes. But there isn’t a guarantee that a furloughed worker will get rehired, and on paper it’s very similar to a layoff. That’s in contrast to Europe, where ‘furloughed’ workers still get paid.
“Some workers will go back. But of tens of millions of people [let-go], half of them are likely to end up somewhere else after this. It’s like a game of musical chairs with a lot fewer chairs when business starts back,” said Mark Zandi, chief economist of Moody’s Analytics.
Employers are using furloughs so they don’t have to start from scratch once revenues and business return. But even when the economy opens back up, it will likely take years to reach the same employment level, Zandi predicts. Here are a few answers to the most common questions about this new and increasingly common facet of the workforce.
Are furloughed workers guaranteed their jobs back?
“If the company’s fortunes turn around, they could potentially rehire them. But there is no guarantee their jobs will be there,” says Roy Cohen, a New York–based career coach (who, he told Fortune, recently recovered from COVID-19).
It is common for auto plants to furloughs staff for a set duration and bring them back once demands returns. But many of the furloughs we are seeing across the country has happening without any idea of a return date. And each company will have a different process or policy for deciding when the furloughs end.
The return of furloughed employees at Hilton will be based on business demand at individual hotels, the hotel chain told Fortune. In China, where Hilton is seeing some business return, staff are likelier to return earlier than their U.S. peers. Disney declined to note how many employees it is furloughing, or its process for figuring out who gets to return first.
Do you get different benefits if you are furloughed vs. laid off?
This is one area where every employer and employee’s situation is different, so it’s important to check with your company’s benefits administrator. Generally speaking, when an employee is laid-off, it is considered a permanent separation. During this pandemic, some employers have offered severance and extended healthcare benefits for workers who have been laid off. The thinking being, this is going to be a tough time to quickly get a new job.
For employees on furlough, the situation varies case by case. But since furloughed employees aren’t earning a paycheck, they can’t contribute to 401(k) and flexible spending accounts.
Right now, Macy’s is allowing furloughed workers to stay on the company’s health plan with the premium 100% covered by the company through at least May, the retailer told Fortune. Hilton and Disney both confirmed they’re doing something similar.
Can I get unemployment while on furlough?
As for government benefits, furloughed workers are eligible for the additional new federal unemployment benefits that were passed as part of the $2.2 trillion stimulus bill. That’s an extra $600 weekly, regardless of their previous wages, on top of their state benefits through July 31.
Unemployment insurance applications and eligibility vary by state, however, many states allow furloughed workers to ability enroll without a waiting period.
Over the weekend Disney World started furloughing many of its 75,000 employees. That wave is so big that Florida created a process to “auto-enroll” these furloughed workers into its unemployment system.
What rights do furloughed workers have?
Furloughed workers are still technically employed and protected by discrimination laws.
“If they start to recall employees, they couldn’t do in a discriminatory way…you can’t bring all the men back first,” said David Barron, an employment lawyer at Cozen O’Connor. But again, there is no law requiring employers to rehire furloughed workers.
What else can furloughed workers to do improve their odds of getting a new job?
“I would make sure you’re up to speed on job search techniques. Have your pitch down,” says Cohen. “If there are any gaps in your skills set, focus your attention on it. Make sure you’re marketable.”
Career opportunities will be created out of this pandemic, Cohen says, and out-of-work Americans and furloughed workers should ask themselves if it is a good time to jump into higher growth areas. And this is a great time to virtually network, as people are hungry for human-to-human connection, he adds.
These unprecedented job losses also mean hiring managers will be very forgiving to applicants who end up going long periods without work. “I think that no one will be chastised or punished for losing a job or making a move during or after this crisis,” Cohen says.
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