Reduction in Force Options

A layoff is a permanent separation of employment; however, employees may be eligible for re-hire when the business reopens.

A furlough is a temporary leave of absence that is generally short in duration, consisting of a full-day or week increments with defined beginning and end dates.

  • During a furlough, employees are not paid, but they are still technically employed.  When the business reopens, any furloughed employees will become active again.
  • Furloughing employees can be seen as a favorable option to retain talent and reduce the cost of separation (vacation time, etc.) or any future hiring and training.
  • It is also important to remember that some states do have restrictions on the length of a furlough.  For example, the California Labor Commissioner has historically deemed furloughs lasting beyond two weeks or the current pay period, whichever is shorter, as violation final pay rules.
  • Non-exempt employees are generally only paid for their hours worked.  Therefore, when furloughed or not working, they do not receive pay.
  • Per the federal Fair Labor Standards Act, exempt employees must be paid their full salaries for any workweek in which any work is performed, subject to limited exception.  Therefore, an employer seeking to furlough exempt employees should be careful to require exempt employees to take unpaid time off in full week increments and to not perform any work during the week, including working from home, reading/responding to emails or calls.


Furlough Letter Outlined

  • Introduction- expressing appreciation, concern for safety and well-being, and explain reason for action (business demands/ government requirements/ safety)
  • Things change fast- explain that the situation is fluid and that things are subject to change on short notice; explain how employees will be notified of those changes.
  • Be clear of furlough status as opposed to a temporary layoff.  Include an end date at which point the situation will be reassessed, even if only “we will reassess the situation in two weeks, at which point a decision will be made and you will be notified as to whether there will be a partial or total recall, an extension of the furlough, or a transition to layoff status.”
  • Compensation- address whether and to what extent employees will be paid.  Consider option to apple accrued unused paid time off.
  • Performance of work- if furlough is unpaid, clearly instruct employee that no work is to be performed while on furlough.
  • Unemployment- if unpaid, provide information on and encouragement to apply for benefits, including state-specific unemployment benefits pamphlets and/or a link to state-specific unemployment claim processing.
  • Benefits- address how furlough can impact eligibility of benefits, especially regarding health insurance. If the company will not be paying premiums, address payment continuation and logistics through COBRA.
  • Notify company of changes/sickness- urge employees to take care of themselves, to actively self-monitor, to seek immediate care if they fall ill, and to notify the company so that the company can assess whether it needs to take responsive measures as to other employees.
  • Resources- provide references/ links to CDC for information regarding COVID-19 symptoms
  • Gathering Personal Belongings- address logistics as applicable
  • Next steps and questions- inform employees when/how they will hear from the company moving forward, who to call for questions, etc.
  • Strong finish- re-iterate appreciation, concern for staff, and optimism for the future of the organization


Reduced Hours

Employers may have employees work fewer hours each week and pay them less.  Reduced work hours and schedules can be applied for non-exempt employees; however, the FLSA does not allow employers to reduce exempt employees’ FLSA exempt status.

It is also important to be mindful that eligibility for benefits is determined month to month, and employee becomes ineligible for active health benefits when he/she ceases to work the minimum hours required.  However, hours paid or entitled to payment, even if not actually worked, count towards eligibility. COBRA rules may apply.


Voluntary Time Off

Per the FLSA, exempt employees may take voluntary time off without pay.  However, this unpaid time off must be completely voluntary and cannot be caused by employer business conditions or be the result of pressure or request by the employer to take time off.


Reduction in Force (RIF)

Eliminating a position without the intent of replacing it.  Often time layoffs turn into a RIF.  This can be accomplished through termination or attrition.  In which some employees can be confused thinking that RIF means they will be called back, so it is important that employers are very clear about the situation.


Worker Adjustment and Retraining Notification (WARN) Act

Under the WARN Act, generally employers with 100 or more employees, who are conducting a furlough, RIF, layoff, or relocation of 50 or more employees at a single site during a 30-day period (or 90 days in the aggregate), must give employees at least 60 days advance notice.  If the action is taken due to a natural disaster or unforeseeable business circumstances, the WARN Act does have exceptions on the timing requirements.

It is important to note that the WARN Act can vary among states.  In which some states are waiving their notice of timing requirements for layoffs related to COVID-19; therefore, employers should be mindful and up to date of their state’s version of the Act.


Eligibility and Management of Health Benefits

During a furlough or layoff health benefits can be affected.  When an employee is laid off, they become separated from the business and are eligible to continue their benefits through COBRA. In which employers could choose to subsidize COBRA benefit payments for impacted employees.

When an employee is furloughed or experienced a reduction in hours, they may become ineligible for health benefits because they have ceased to work the minimum hours required to qualify.  However, hours paid or entitled to payment, even if not actually worked, count towards eligibility.  COBRA rules may apply.


Families First Coronavirus Response Act (FFCRA)

This bill was signed into law in order to provide greater benefits to U.S. workers through paid sick leave, expansion of FMLA, and access to unemployment compensation benefits.  These benefits will extend from April 1, 2020 through December 31, 2020.  Two key provisions employers need to plan for:

Emergency Paid Sick Leave

  • Applies to employers with less than 500 employees; employers with less than 50 employees may qualify for exemption if they have experience undue hardship to their business; other exemptions apply for certain employers that employ health care providers and emergency responders.
  • Employers are required to provide 80 hours of job protected paid leave to employees who meet any of the eligibility criteria as follows:
    • Employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19
    • Employee has been advised by a healthcare provider to self-quarantine
    • Employee is experiencing symptoms of COVID-19
    • Employee is responsible for the care of an individual who is subject to quarantine or isolation
    • Employee is responsible for children whose school or daycare provider is closed or unavailable due to COVID-19
    • Employee is experiencing any other substantially similar condition outlined by the Secretary of Health and Human Services, in consultation with Secretary of Labor and Secretary of the Treasury.
  • For any of the first three bullets above, full-time employees are eligible to receive emergency paid sick leave at their regular pay rate (up to $511 per day/$5,110 in the aggregate). For the remaining bullets above, full-time employees are eligible to receive 2/3 of their regular rate of pay (up to $200 per day/$2,000 in the aggregate).
  • Part time employees are also eligible for prorated emergency paid sick leave based on the average number of hours worked in two-week period.
  • There is no minimum term of employment to be eligible for benefits.
  • Unused sick leave cannot be carried over and will not be paid out at separation.


Emergency Family and Medical Leave Expansion Act (EFMLA)

  • Applies to employers with less than 500 employees; employers with less than 50 employees may also qualify for exemption if experienced undue hardship to the business; other exemptions apply for certain employers that employ health care providers and emergency responders.
  • Employees may take up to 12 weeks of job protected leave to care for a minor child whose school or day care provider is unavailable due to the public health emergency (COVID-19).
  • Employees are eligible after working 30 calendar days for their employer
  • The first 10 days of leave are unpaid; the remaining days are paid at two-thirds the regular rate of pay up to $200 per day/$10,000 in the aggregate.
  • Employees can also use employer provided, accrued, unused vacation or paid sick leave to substitute the first unpaid 10 days, or the emergency sick leave benefit under the FFCRA, in which are all at the employee’s decision.
  • The length of leave under EFMLA is reduced by any FMLA leave that has previously been taken by an employee in the same administrative year. It is not a separate 12-week entitlement.
  • FMLA’s job protection applies with one exception, in which employers with less than 25 employees are exempt from reinstatement obligations if an employee’s position no longer exists due to the changes resulting from the public health emergency and the employer take steps to restore the employee to an equivalent position.
  • Anti-retaliation provision also applies to FMLA
  • Employers will also be reimbursed for the full amount within three months in the form of a payroll tax credit. The reimbursement will also cover employer’s contributions to health insurance premiums during the leave.


Working from Home Tips, Techniques and Strategies

Working from home can be difficult and hard to manage.  Below are some tips to help employees cope with working from home.

  • Set up a routine
  • Create some boundaries within your workspace
  • Take breaks
  • Stay up to date with team members
  • Be considerate of time zones
  • Set some ground rules for team communication
  • Trust the foundation of your team


Likewise, below are some strategies and best practices to help both employer and employee excel.

  • Spell out goals and roles
  • Clarify and re-clarify everyone’s goals and roles
  • Map out skills and capacity
  • Emphasize personal interactions
  • Keep everyone in mind
  • Schedule regular meetings
  • Create the virtual “water cooler” by humanizing communication
  • Normalize new work environments