Time Off

What Is a Furlough?

A furlough is a mandatory temporary leave of absence, usually unpaid, during which employees remain employed and normally keep their benefits and their right to return to work. Employers use furloughs to cut payroll costs during a downturn, a seasonal lull, or a government shutdown while retaining trained staff — the key difference from a layoff, which ends employment altogether.

How a Furlough Works

  • 1The employer announces the furlough with the dates or the conditions for return, in writing.
  • 2Affected employees stop working — either completely, or on reduced days or hours.
  • 3Pay stops for the furloughed time, though health benefits usually continue.
  • 4Employees generally may claim unemployment benefits for the furloughed period, subject to state rules.
  • 5The employee returns to their role when the furlough ends, without needing to be rehired.

Furlough vs Layoff, and the Exempt-Employee Trap

A furlough is temporary and the employment relationship survives it; a layoff is a termination, which triggers final-pay rules and, in most states, payout of accrued PTO. That distinction is what makes furloughs attractive — but it comes with a trap for salaried exempt staff. Under the FLSA, exempt employees must receive their full salary for any week in which they perform any work, so a partial-week furlough can destroy the exemption and make the role owed overtime. The safe approach is to furlough exempt employees in full weekly increments and bar them from doing any work at all — no email, no "quick calls" — during that time. Large employers must also watch the WARN Act: a furlough exceeding six months, or hours cut by more than 50% for six months, can legally convert into an employment loss requiring 60 days' notice. Employers should also confirm with their plan provider that benefits can continue during unpaid leave before promising it.

Keep the Roster Straight Through a Shutdown

ClockIt lets you mark employees as furloughed for a defined period so they drop off schedules and timesheets without being deleted, keeping payroll clean and giving you a dated record of exactly who was furloughed and when — which matters if WARN thresholds or exemption questions come up later.

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Frequently Asked Questions

What is the difference between a furlough and a layoff?
A furlough is temporary — you stay employed, usually keep benefits, and are expected back. A layoff ends employment, triggers final-pay rules, and in most states requires accrued PTO to be paid out.
Do you get paid during a furlough?
Usually not for the furloughed time — that is the point of it. Health benefits typically continue, and furloughed employees can generally claim unemployment benefits, though eligibility varies by state.
Can you work another job while furloughed?
Often yes, unless your contract or an exclusivity or non-compete clause says otherwise. Check the terms of the furlough notice first, and confirm whether outside earnings affect any unemployment claim.
Can salaried employees be furloughed for part of a week?
It is risky. Under the FLSA an exempt employee must be paid their full salary for any week in which they do any work, so partial-week furloughs can void the exemption. Furlough exempt staff in full weekly blocks and prohibit all work.

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