Effective March 24, 2020, Governor Baker ordered the temporary closure of all “non-essential” businesses in Massachusetts due to the COVID-19 crisis. As a result, owners and managers of such businesses have placed some or all of their employees on furlough or lay-off.
A “furlough” in employment generally means a temporary interruption in work caused by an unforeseen circumstance usually beyond the employer’s control. In some cases, employers will continue health insurance coverage for employees during a furlough.
A “lay-off”, by comparison, occurs when employers decide to reduce their workforce because of a decline in business volume due to economic reasons. Health insurance is not usually continued by the employer during a layoff.
- Workplace Closures and Furloughed Employees
Employees are not eligible for paid leave under the Families First Coronavirus Response Act (“FFCRA”) if their workplace has been closed or if they have been furloughed. This is true if the closure or furlough occurred before or after March 24 and if the closure or furlough responds to a government order to close. The FFCRA provides benefits for employees who continue to be employed during the pandemic, primarily employees of “first responders” and other essential businesses.
- Work Performed By Furloughed Employees
Furloughed employees are not expected to perform any work while furloughed. Employers can and should instruct employees not to perform work during a furlough. If furloughed employees perform work remotely, they are entitled to be compensated under federal and state wage and hour laws. This includes office work such as handling emails or telephone calls. Failure to pay employees for work performed during a furlough may violate the Massachusetts Wage Act which provides for triple damages and attorneys’ fees.
Exempt salaried employees who perform work while furloughed are likely entitled to a full week’s pay to remain exempt. Non-exempt employees who perform work while furloughed must be compensated for any time they actually work. Although work of any kind should be discouraged, employers should instruct employees to report work performed during a furlough, even if that work is not authorized by the employer, to avoid wage and hour exposure.
- Vacation Pay And Paid-Time-Off During Furlough
Furloughed employees may use earned vacation pay or other pay for earned time-off provided such use is consistent with the employer’s policies which remain in effect during a furlough. For example, taking vacation pay may require the prior consent of the employer.
- Health Insurance Coverage During Furlough
Employers may choose to pay some or all of the cost to continue health insurance for furloughed employees. Where the employee’s contribution to the cost of health insurance is usually deducted from the pay check, the employer may choose to pay the entire cost during a furlough or to bill each employee for the employee’s share.
- Unemployment Compensation
Furloughed employees should be advised of their right to apply to the Massachusetts Department of Unemployment Assistance for unemployment compensation benefits (www.mass.gov/dua). In response to the COVID-19 crisis, the federal government has increased the amount of unemployment payment to each employee and extended the period of time to collect such benefits.
- WARN Act Obligations For Large Employers
Employers with 100 or more employees are subject to the WARN Act which requires at least 60 days advance written notice to employees and to the government of a “plant closing” or a “mass lay-off”. A government order closing a business may be an “unforeseeable business circumstance” which permits fewer than 60 days advance notice provided employees are given as much notice as possible under the circumstances.
- Furloughed Employees Are Expected To Return To Work
Since the COVID-19 epidemic is expected to end, furloughed employees have an expectation of returning to work. Accordingly, employers can and should communicate with furloughed employees to provide information regarding the anticipated length of the furlough. This is not only good business practice, but it is essential to maintain the employer’s workforce when the furlough ends.
Please call Kevin Callanan (781-878-1604) or Chris Callanan (617-330-7575) with any questions regarding the foregoing information.
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