Can You Get Unemployment if You're Furloughed?

When a disaster strikes, companies and small businesses may be forced to shut down temporarily. In such cases, not all employers are financially able to ask you to work from home or give you paid time off. Instead, they may have mass layoffs or offer unpaid leaves of absence — or what is otherwise called a furlough — for a specific period.

Unemployment laws can change during times of national emergency and economic hardship. The federal government sometimes steps in to enable furloughed employees to receive unemployment benefits. This happened, for instance, during the height of the COVID-19 pandemic.

What Is a Furlough?

Furlough is a temporary pause in work for a specified period of time. Employers and employees often arrange for employees to take unpaid leave of absence during the furlough period. For instance, an employer may ask an employee who works 40 hours per week to take a five-day furlough during the first week of July. Once the period ends, the employee can return to work under a regular schedule.

What Are the Two Types of Furloughs?

According to the U.S. Office of Personnel Management (OPM), there are two types of furloughs: administrative and shutdown.

An administrative furlough is a strategy implemented by a company or an agency to manage reductions caused by insufficient work, downsizing, reduced funding, or any financial constraints not due to a lapse in appropriations. Furloughs caused by budget cuts fall under administrative furlough.

Meanwhile, a shutdown or emergency furlough happens when funding is not approved. It can occur at the beginning of a fiscal year without an approved budget. It can also happen if no appropriations law or new resolutions exist, even after a continuing resolution. When this happens, the agencies affected should stop all activities. Often, agencies have minimal time to prepare for a shutdown furlough.

What is the Difference Between a Layoff and a Furlough?

When a company lays off an employee, their employment permanently ends. Their health insurance, paid time off (PTO), and other employment benefits also cease. For laid-off employees, the employer-employee relationship ends, and this lasts indefinitely.

Conversely, a furlough only lasts for a certain period. Employees often return to their regular schedules once the furlough period ends. A furloughed employee still counts as an existing company employee and retains their health insurance and employment benefits. Although the duration of the furlough period varies, it often lasts from a few weeks to six months. During a furlough, employees usually keep their seniority and return to the same pay level they once were.

Do You Get Paid if You Are on Furlough?

Your employment status affects whether you get paid while on furlough. In the United States, laws classify employees as either exempt or nonexempt.

Exempt or Salaried Employees

Under the Fair Labor Standards Act (FLSA), employers should pay exempt or salaried employees their full salary for any work week. This rule applies regardless of the work hours they spent that week. So, employers should furlough exempt employees in full weekly increments if they want to save costs.

During that week, exempt employees under furlough should not work at all. Employers may even restrict them from using employer-issued devices or accessing work-related programs. Employers often take measures to ensure that exempt employees do not engage in any work during the furlough period. If exempt employees do not render work during that week, employers do not have to pay them.

Nonexempt or hourly employees

Hourly or nonexempt employees have more flexible arrangements. Employers can reduce their work hours without the need to pay for a full week's salary. This means the law allows hourly employees to work fewer hours per day or week. Employers should only pay nonexempt employees for the hours they worked during that week.

What Are My Rights as a Furloughed Employee?

As a furloughed employee, you have the following rights:

• You can start a job search for a new full-time or part-time job
• You may ask for paid personal and vacation time (if you have accumulated days) during the furlough period
• You can get unemployment benefits (in most cases)

Can You Claim Unemployment Benefits When You Are Furloughed?

To qualify for unemployment benefits, you must either be unemployed or work reduced hours, not due to your actions. Some of these circumstances include the following:

Laid Off

Layoffs happen when a lack of work is unrelated to the employee's performance. An example is when the employer lacks available work for the employee or closes the business. Laid-off employees are eligible for unemployment benefits.

Reduced Working Hours

Employees who experience reduced working hours not caused by their request could also qualify for unemployment benefits. The reduction should not be the employee's fault.

Terminated From Work

Your eligibility for unemployment benefits may apply if your employer fires you from work for reasons other than your misconduct. Some actions that may constitute misconduct include violating company policy or law, mismanaging your position, or not performing your job adequately.

Resignation From Work

If you quit your job, you are not eligible for unemployment compensation. But, you may qualify for benefits if you resign from work because of one of the reasons below:

• You quit because of work-related reasons. Examples include unsafe working conditions or the employer making significant changes to the hiring agreement. Sometimes, employees quit because they are not getting paid or have difficulty receiving payment on time.
• You experienced a medical illness or injury that prevented you from working.
• You resigned from work to take care of a minor or a terminally ill spouse.
• You have to quit work to relocate with your military spouse.

State laws determine whether a furloughed employee qualifies for full or partial unemployment benefits. The criteria may vary, and state laws sometimes classify employees based on their workweek and work hours. So, it is vital to research your state's laws before applying for unemployment benefits.

How Long Can I Collect Unemployment Benefits?

Most states allow you to collect unemployment for 26 weeks. But be sure to research your state laws as they determine how furloughed workers are eligible for unemployment benefits from the U.S. Department of Labor.

The Federal Government May Intervene

In rare situations, Congress may pass a bill allowing all furloughed workers to qualify for unemployment benefits. For instance, Congress passed a stimulus package bill to respond to the COVID-19 pandemic.

This bill extended unemployment benefits to all employees who lost their jobs because of the COVID-19 pandemic. It also covers unemployed individuals, including those who may not otherwise have been eligible at the state level, including furloughed employees. The bill also provided a $600 weekly check to all employees who qualified for unemployment benefits.

Additional Resources:

• If My Work Closes Because of an Emergency, Am I Still Owed Wages?
• Changes to Unemployment During the COVID-19 Pandemic
• FAQs: Employee Leave Policies
• Unemployment Benefits

Consult With an Employment Attorney

Getting furloughed can cause severe financial distress to you and your loved ones. Your state laws can help you determine your eligibility for unemployment benefits. But for comprehensive legal advice, you can consult an employment law attorney. They can help you understand your rights as a furloughed employee and look at what other employee benefits or unemployment claims you are eligible for.