Furlough or Layoff? (Gwen Moritz Editor’s Note)

A local company — it really doesn’t matter which one — broke the bad news to a bunch of its employees a few weeks back: We can’t keep paying you when most of our clients are closed because of the pandemic. Go home.

I got a tip about this, so I emailed to ask what was going on. It took a couple of days, but eventually the company confirmed that it had furloughed a sizable minority of its employees. I wrote up a short article, just one of a depressing number of similar stories, and we posted it on ArkansasBusiness.com.

In the story, I used the word “layoff” interchangeably with “furlough.” And — believe me on this — the company’s spokesperson was not happy. Not at all. Because their employees were not laid off; they were furloughed.

I changed the language online because it seemed very important to the company. But I struck out when I asked for a clarification on the specific distinction between a layoff and a furlough. Are these employees retaining any income? Benefits? Are they guaranteed a date at which they will be able to return? Are they eligible for unemployment benefits?

I had always considered a layoff to be a temporary response to a decrease in demand for a particular company’s goods or services — exactly the situation that the company in question called a furlough. A furlough, in my mind, was involuntary, unpaid time off work — sometimes just a reduction in hours — for a specific period. And if you look up furlough in your choice of dictionaries, you are likely to find layoff is often used in any definition that refers to idling employees (as opposed to a leave of absence from the military or a prisoner’s temporary release).

So, after hearing nothing back for a few days, I again asked the company to help me understand the distinction between their furloughs and a layoff. “We are following the labor laws so our furlough is no different from how [the] Department of Labor defines it,” the spokesperson responded.

I never suspected any violation of the law. Unfortunately, the Department of Labor does not actually have a definition for a furlough. Neither does the state of Arkansas.

“There is no legal definition for layoff or for furlough in the Employment Security Law…,” Zoe Calkins, communications director for the Arkansas Division of Workforce Services, told me when I turned to her for help in understanding the distinction.

What’s more, she said in an email, “An employer is free to call a separation from work what it chooses, but DWS will consider the actual terms of the separation in deciding eligibility for unemployment insurance benefits. Generally speaking for UI purposes, a layoff of ten weeks or less is considered a temporary layoff and a layoff of more than ten weeks is considered a discharge — regardless what the employer chooses to call it.”

At that point, I sent out a distress call to Bruce Cross of the Cross Gunter Witherspoon & Galchus law firm, which specializes in employment law (and does some work for Arkansas Business Publishing Group). “Are there standard or legal definitions of layoff vs. furlough?” I pleaded.

“I don’t know how many times we’ve had this question,” Cross said. Maybe I imagined a little bit of a sigh. While some states have laws that define furloughs, “in Arkansas, we are really just talking about layoffs.”

He confirmed what Calkins at DWS told me: The language is a matter of employer preference. “We have some clients that like to use the word furlough because, I don’t know, it sounds softer. But how do you put lipstick on a pig?”

Some employers are certain that they will be able to bring everyone back, so “we’ll just call it furlough and it sounds better.” Other companies, Cross said, “call it a temporary layoff due to the pandemic, and the hope is that people can come back and reapply for positions.” Either way, they are “eliminating people from the payroll for some period of time unknown, during which they can go down and attempt to collect unemployment.”

Ultimately, he said, “This is just such an unprecedented scenario that, call it layoff or call it furlough, it doesn’t really matter what you call it.”

I’m slightly relieved to learn that my original article was not as factually inaccurate as the spokesperson insisted. It’s my job to defend against flackery and spin, and it’s my own fault for not being as well-armed as I should have been.

Bruce Cross and I lapsed into nostalgia for downtown Little Rock restaurants that we haven’t been able to visit in recent weeks. I’m jonesing for the special Tuesday burrito at Samantha’s Tap Room & Wood Grill on Main Street, and I suspect I’m not alone.

Email Gwen Moritz, editor of Arkansas Business, at GMoritz@ABPG.com and follow her on Twitter at @gwenmoritz.