Furlough
A furlough is unpaid time off or a cut in scheduled hours imposed for business reasons, while the employment relationship continues.
Unlike a separation, a furlough keeps the employee employed with a return expected, and unlike a leave of absenceLeave of absence. A leave of absence is an approved period away from work while employment continues, whether the time is paid, unpaid, or a mix of both.Click to open the term, the time off is your decision rather than the employee’s request. A furlough takes two forms: whole workweeksWorkweek (FLSA). A workweek under the Fair Labor Standards Act is a fixed, regularly recurring period of 168 consecutive hours used to compute overtime.Click to open the term with no work, or a shorter schedule. Whether health and retirement coverage continues depends on each plan’s eligibility terms. Furloughed employees may be able to claim unemployment benefits under state rules, and in states with a short-time compensation (work sharing) program, a reduced schedule under your approved plan can draw prorated benefits.
How do you pay exempt and non-exempt employees during a furlough?
With limited exceptions, you must pay a salaried exempt employee the full salary for any week in which the employee performs any work, however few the days or hours, so exempt furloughs generally run in full workweeks. Physicians, lawyers, teachers in bona fide educational institutions, and outside sales employees have no salary requirement. Under the FLSAFLSA. The Fair Labor Standards Act (FLSA) is the federal law setting minimum-wage, overtime, recordkeeping, and youth employment standards for covered employment.Click to open the term, you generally owe non-exempt employees pay only for hours worked: at least the minimum wageMinimum wage. Minimum wage is the lowest hourly rate you may legally pay a covered employee, set by federal, state, and sometimes local law.Click to open the term, plus any overtime, on the regular payday. State laws can differ, so check the state where the employee works.
| SITUATION | FEDERAL PAY RULE |
|---|---|
| Exempt, full workweek with no work | No salary owed for that week |
| Exempt, any work during the week | Generally full salary, whatever the days or hours worked |
| Exempt, furlough days within a workweek | No deduction for days you have no work available; such a deduction can cost the exemption |
| Exempt, public agency budget-required furlough | Salary basis lost only in the week pay is reduced |
| Exempt, prospective salary cut | Allowed if bona fide and still at least $684 a week |
| Non-exempt | At least the minimum wage for hours worked; overtime past 40 hours |
- Fact Sheet #70: Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues
- Short-Time Compensation
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.