As businesses across the nation respond to preventative measures to combat the threat of COVID-19 and prepare for the resulting economic impact, employers of all sizes are evaluating financial options for their workforce.
Employers are seeking to balance supporting their employees while sustaining their business in light of the global pandemic.
Since commonly used terms like “furlough”, “layoff”, and “reduction in force” can be a source for confusion, but the outcomes of each action are uniquely different and deserve understanding before making a decision.
VIDEO: Furloughs, Layoffs, Reductions-in-Force: What’s the Difference?
Furlough usually means a reduction in hours or taking a certain amount of unpaid time off. It may be required of all employees, or essential employees may be exempt. Furloughed employees can usually keep their medical benefits.
Layoffs happen when an employer separates an employee from payroll. This can be temporary or permanent. A laid-off employee’s medical benefits will usually end.
Reduction-in-force (RIF) occurs when an employer eliminates a position with no intention of replacing it in the near future. A layoff can eventually turn into a RIF. A RIFed employee’s medical benefits will end.
In all three cases, the employee can typically collect unemployment insurance benefits. A furloughed employee can usually collect partial unemployment, even if they’re still employed.
For more information on which option may be best for your company, see What is the difference between a furlough, a layoff and a reduction in force? (SHRM)