How Long Can a Company Furlough an Employee?

Employee furloughs represent a temporary, unpaid break from work, and are often utilized by companies as a cost-saving tactic. Typically, an employee furlough policy mandates employees to take days off on a periodic basis, such as weekly, bi-weekly, or monthly.

Several factors may prompt employers to enact employee furloughs, including company restructuring, financial constraints, facility closures, and seasonal fluctuations. Yet, employee furloughs often raise numerous questions and uncertainties.

One common question that pops up is, “How long can a company furlough an employee?” We’re here to answer that question and more while guiding you through the main points of the employee furlough process. Let’s get started.

Essentially, the length of an employee furlough hinges on various factors, such as industry, job type, employee status, and individual preferences. However, given their temporary nature, furloughs are not a permanent solution for reducing staff; that’s where layoffs or reduction in force (RIF) come into play. 

Ideally, companies should limit furloughs to a maximum of one year, and have a plan to recall furloughed employees within this timeframe.

Prolonged furloughs can detrimentally affect a company’s reputation, strain business relationships, and create operational challenges. Therefore, it’s prudent to reserve employee furloughs for short-term needs and explore alternative workforce reduction methods for longer durations.

Issuing a formal notice is essential for implementing an employee furlough. Employers must provide written notification to employees well in advance, typically at least 60 days beforehand. This notice should detail the purpose, duration, and conditions of the furlough, ensuring clarity and compliance with all legal requirements. In cases where written notices are impractical, verbal or telephonic communication is acceptable, provided it aligns with the organization’s communication norms and policies.

Preparing for a smooth transition into furloughs requires careful planning and clear communication. Employers should have furlough letters prepared in advance, along with a list of frequently asked questions to address employee concerns comprehensively. Maintaining transparency, empathy, and support during discussions with furloughed employees can help alleviate anxieties and facilitate a constructive dialogue.

Legal considerations also come into play, particularly concerning the classification of employees as exempt or nonexempt. Nonexempt employees are subject to overtime regulations, while exempt employees receive a fixed salary regardless of hours worked. Employers must ensure compliance with relevant labor laws and provide appropriate compensation for any work performed during furlough periods. Check with your state department of labor for regulations applicable to your location.

So how long can a company furlough an employee? As we’ve covered here, the answer is generally for the short-term–ideally no more than one year–depending on various factors, your company policies, and local labor regulations.

Having a well-defined employee furlough policy can effectively manage workforce dynamics and support business continuity. Employers should carefully consider furlough duration, employee classifications, and legal implications when implementing furloughs, seeking guidance from legal experts as needed.

Here are the key takeaways:

• The length of a furlough depends on factors like industry, job type, employee status, and individual preferences.
• Furloughs are temporary solutions and should not be considered permanent staff reductions; layoffs or RIFs serve that purpose.
• Ideally, furloughs should not exceed one year, with plans for recalling furloughed employees within this timeframe to avoid negative impacts on the company’s reputation and operations.
• Employers must provide written notification well in advance, per applicable labor laws and regulations, detailing the purpose, duration, and conditions of the furlough.

If your organization is looking for support with your employee furloughs or considering a reduction in force (RIF), we are here to help. Click below to learn how our Careerminds outplacement services can support you during this process.

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Cynthia Orduña

Cynthia Orduña is a Career and Business Coach with a background in recruiting, human resources, and diversity, equity, and inclusion. She has helped 50+ companies around the world hire and retain talent in cities like LA, SF, NY, Berlin, Tokyo, Sydney, and London. She has also coached over 300 people, from entry to senior levels, in developing their one-of-a-kind career paths, Her work has been featured in publications such as Business Insider, The Balance Careers, The Zoe Report, and more. To learn more you can connect with Cynthia on LinkedIn.