The economic repercussions of COVID-19 have been immediate and in many cases, debilitating, to American business across all industries, from food & beverage to manufacturing to healthcare. Challenges faced include government-mandated closures of certain “non-essential” businesses and reduced demand of products and/or services. As business revenue plummets, many companies are faced with the need to cut significant human capital costs in order to keep their business afloat. Below are some options for companies to consider as they work to address reduced staffing needs.
While the term furlough is used to describe various arrangements, typically a furlough is an unpaid leave of absence. A furlough is often ideal for employers who anticipate a temporary need for reduced staffing. Employees on furlough are still technically employed by the employer and, as a result, may be able to remain on the employer’s group health plan(s) if permitted by the terms of the plan(s). Employers may require employees to pay the applicable employee portion of the premium during the furlough. If the employer’s group health plan(s) is not available to employees on furlough, COBRA coverage would commence. Also, many states allow for unemployment compensation to employees on an unpaid furlough.