Furlough vs. Layoff: Key Differences and What It Means for Your Benefits

When businesses face financial pressure or operational changes, they may reduce labor costs by furloughing or laying off employees. For workers, these terms can feel alarming—and confusing.

Understanding the difference between being furloughed and being laid off can help you know what to expect, what rights you may have, and what steps to take next.

What Is a Furlough?

A furlough is typically a period of temporary, unpaid leave initiated by an employer.

• You are not working and not receiving wages during the furlough
• You generally remain an employee of the company
• There is usually an expectation that you may be called back to work in the future

The length of a furlough may be defined or open-ended, depending on the employer’s situation.

Are Furloughs Legal?

In general, furloughs are legal when employers follow applicable wage-and-hour laws, employment contracts, and benefit plan rules.

Legality can depend on factors such as:

• Whether the employee is exempt or non-exempt under wage laws
• State labor laws
• Union agreements or individual employment contracts

Because these factors vary, furlough rules are not identical for all workers.

Why Do Companies Furlough Employees?

Employers may use furloughs when they expect a slowdown to be temporary and want to retain their workforce rather than permanently eliminate positions.

Common reasons include:

• Reduced cash flow
• Seasonal slowdowns
• Temporary pauses in operations
• Delays in funding or project work

From an employer’s perspective, furloughs allow for a faster return to normal operations if conditions improve.

Do Furloughed Employees Get Paid or Keep Benefits?

During a furlough:

• Employees do not receive wages or salary for time not worked
• Health insurance and other benefits may continue, change, or pause, depending on the employer’s benefit plans

Benefit continuation is not automatic and should be confirmed with human resources or plan documents.

Some furloughed workers may qualify for unemployment benefits, depending on state law.

Can You Get Unemployment Benefits While Furloughed?

In many states, furloughed employees may be eligible for unemployment benefits, but eligibility rules vary.

States consider factors such as:

• Whether the furlough is full or partial
• Whether the employee is receiving any pay
• State definitions of unemployment or partial unemployment

Your state unemployment agency is the best source for determining eligibility.

Can Furloughed Employees Work Another Job?

In many cases, furloughed employees may:

• Look for permanent employment
• Accept temporary or part-time work, depending on contract terms

However:

• Some employment agreements restrict outside work
• Earnings from other work may affect unemployment benefit eligibility

Always review your contract and state rules before starting additional work.

Public vs. Private Sector Furloughs

Furloughs can occur in both sectors, but rules differ:

• Private sector: Often tied to business conditions, seasonality, or funding
• Public sector: May occur during budget gaps or funding authorization delays

Public-sector furloughs are governed by specific statutes and agency rules.

How to Prepare If You Think You Might Be Furloughed

If a furlough is possible, you may want to consider:

• Reviewing your household budget
• Building an emergency savings cushion if possible
• Updating your resume
• Understanding your employer’s benefit policies

These are general considerations, not requirements.

What to Do After Being Furloughed

If a furlough begins unexpectedly, consider:

• Confirming benefit status and return-to-work expectations with HR
• Checking unemployment eligibility in your state
• Exploring temporary or permanent job opportunities
• Using time for skill development or training if feasible

Each situation is different, and flexibility can help during uncertainty.

Your Rights While Furloughed

Furloughed employees generally:

• Remain employees of the organization
• Are typically not permitted to perform work during furlough periods unless legally allowed
• May seek other employment, subject to contracts and law

Rules differ for exempt and non-exempt employees under wage laws.

Where to Find State-Specific Information

Because furlough rules and unemployment eligibility vary, consult official sources for accurate guidance.

To find state-specific unemployment information, visit Jobcase’s Unemployment Resource Center:
👉 https://www.jobcase.com/ru/unemployment-benefits-overview

If you’re exploring new opportunities, you can also browse openings on Jobcase’s job board:
👉 https://www.jobcase.com/jobs/search

Important Note

This article is for general informational purposes only. Employment status, benefits, and legal rights during a furlough depend on state law, employer policy, and individual circumstances. Official state agencies or human resources departments can provide guidance specific to your situation.