Furlough: What It Means, How Long It Could Last

With the coronavirus pandemic keeping people away from crowded offices or shops, many Americans cannot go to work for at least a few weeks. Rather than laying off employees, some businesses are furloughing huge portions of their staffs. Here is what you need to know about furloughs and what they mean for workers.

Macy's announced on Monday that it will be furloughing the majority of its employees — around 125,000 people. Other companies have done the same, opting for furloughs with the hope of calling workers back when the crisis is over. That is one of the most important aspects of a furlough — the intention to bring workers back when it is over. It also allows employees to retain some employment benefits during their time off, though not regular pay checks.

A furlough is essentially an unpaid leave of absence from work. During this time, employees are technically still employed by their company, but are not scheduled for any shifts. Hourly workers will therefore not be paid. In many cases, even salary employees do not get their wages. The benefit here is that furloughed employees still retain benefits, including health insurance. During a global pandemic, this is an important aspect of the arrangement.

The other big upside to being furloughed is that workers do not have to worry about finding a new job. The COVID-19 outbreak is already having a massive impact on the economy, and it is expected to continue to send ripples through the job market for years to come. On top of everything else, now would be a stressful time to be hunting for a job.

Still, there are downsides to being furloughed, and many workers are chafing against them now. For one thing, many states do not allow furloughed employees to collect unemployment benefits, as they are still technically working at their company. This can make it very hard to find any cash to live on during the furlough period.

There are also varying rules about how benefits are dispersed during furloughs. Some companies will provide health insurance, but not other benefits, such as retirement benefits.

Even health coverage is tricky, as employees pay a part of their premium out of each paycheck. Companies like Macy's are covering furloughed employees' healthcare premiums while they are furloughed, but others may not, meaning that employees would actually owe money back to their insurance providers during the time when they are not working.

So far, big companies including Macy's, Gap Inc., Marriott, General Electric, Everlane and The Cheescake Factor have announced furloughs in the United States, according to a report by Fortune.com. More may be coming, and they could last months as the coronavirus pandemic continues to sweep through the U.S.

For the latest information on the pandemic, visit the CDC's website.