By Damian Scandiffio, Client Services Director
As businesses have roared back to life in recent weeks, is your organization ready to explore the possibility of bringing back your furloughed or laid-off employees? If you’re an Oregon company, here are some valuable resources to prepare for the road ahead.
Question: What’s the difference between a furlough and a layoff?
Answer: Here are some key bullet points to help you understand the difference between furloughed and laid-off workers.
- Furloughs are typically used to retain staff that a company cannot afford, but do not want to officially lay off. Furloughed employees have an expectation that they will return to work. In most cases, an employer will give furloughed employees either a specific date or a specific condition for resuming duties.
- Furloughed employees typically retain their benefits. Most notably, employees usually retain access to any health and life insurance during their furlough.
- A furloughed public employee retains their employment rights. Government employees cannot be fired or replaced without process. For a public employee who has been furloughed, the individual has a presumptive right to return to that position if they so choose.
- A furlough is relatively seamless. Laying off employees requires significant legwork, which can be time consuming and expensive. By contrast, a furloughed employee can “come and go” fairly easily.
Question: If I decide to not lay off my employee, but I do not have work for them to perform and do not pay them during this period of time (i.e., unpaid furlough), how should I report this to PERS?
Answer: This is an employer determination that depends on the facts. The threshold requirement for PERS membership qualification requires that the person be an employee. If the person is not laid off or terminated, they are thus considered an employee. As an employee, they may receive some employee benefits even though they are not actually performing services or receiving pay.
In general, if the person receives no wages or work hours but is still an employee, there is nothing you have to report or change in your reporting. However, if the worker is on unpaid furlough that will last at least 11 business days, the period of absence should be reported as an official leave of absence without pay (LWOP) to PERS, unless otherwise specified by the employee’s collective bargaining agreement or employment agreement. Contact your Employer Service Center representative if you have additional questions.
Question: If I am participating in the Oregon Employment Department’s Work Share program, how should I report the reduced or furloughed hours to PERS?
Answer: Any employer participating in the Work Share program should treat the reduced or furloughed hours as “leave without pay” (no salary or hours). These Work Share program benefits are not considered salary for PERS purposes. Please note that a 20-40% reduction of a full-time employee’s weekly hours under the Work Share program still allows the employee to work the major fraction of the month. As long as the employee remains working and is compensated for at least 50 hours each month, the reduction in work hours due to Work Share program furlough should not reduce the member’s creditable service. However, salaries would be reduced for those months with Work Share program furlough, with potential impacts to both IAP contributions and final average salary. If you have additional eligibility questions about the Work Share program, please visit the Oregon Employment Department’s website, which contains additional frequently asked questions.
Question: When should a company deliver its furloughed employee’s final paycheck?
Answer: For furloughs in Oregon which last more than 35 days, employers must provide an employee with his/her final paycheck no later than the end of the first business day following the employee’s last day of employment. Since the duration of a furlough is likely to be unpredictable due to the ongoing COVID-19 situation, we recommend that employers provide final paychecks on their employees’ last day before furlough, regardless of the expected duration of the furlough.
Have a question about bringing back furloughed or laid-off employees? Connect with me on LinkedIn or email me at email@example.com.
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