March 30, 2020
Authored by: BCLP, Allison Eckstrom, Anthony George, Marcy Bergman and Merrit Jones
As an alternative to laying off employees, many retailers may be considering furloughs – unpaid leaves or drastic reductions in work hours or work schedules – that allow them to retain employees and possibly continue to provide certain benefits. Retailers should be aware that furloughs still likely trigger notice requirements under state WARN laws, and in California may be considered a termination of employment requiring payment of final wages.
This post provides an overview of furlough considerations with respect to unemployment benefits, WARN laws, possible termination implications, reduced hours or work share, use of vacation time, and benefits.
Furloughed employees, as well as many employees with reduced hours, are eligible for unemployment insurance benefits. In California, Governor Newsom’s Executive Order N-25-20 removes the waiting period to receive benefits. More information on filing for unemployment benefits is available here.
The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers with at least 100 employees who lay off at least 50 employees to provide advance notice of the “employment loss.” However, furloughs of less than 6 months do not qualify as an employment loss under the federal law. At least 20 states have WARN laws, and the laws vary from state to state.
California’s WARN law, which applies to employers with 75 or more employees who lay off at least 50 employees, applies to furloughs exceeding a “de minimis” amount of time. The California Court of Appeal has held that a four- or five-week furlough