Should my law firm layoff or furlough our employees?

The decision to let go of an employee, either temporarily or permanently is often a difficult one for any law firm. There are a number of factors that go into the choice, but it will ultimately depend on foreseeable workflow, income and ability to fulfill case requirements.

Layoff versus furlough

One of the biggest differences between a layoff and a furlough is whether or not the employee remains on payroll and their associated benefits.

With a layoff, an employee is no longer on payroll and if they come back to the law firm they must be rehired.

With a furlough, the employee remains on the payroll but they are required to either work fewer hours or take unpaid time off. The furlough can be done as a number of days a week, such as requiring employees to only work three instead of five days. Alternatively, law firms can also require a specific amount of time off, such as a week off unpaid which can be a solution for salaried employees who must be paid for a week if they work any time during it^[1].

Factors in decision-making

When deciding between furlough or a layoff, it’s important to look at whether or not the employee should be let go permanently or not.

If you think that the financial issues causing the decision to come up will either subside and recovery is possible, then a furlough is a viable option to help you retain valuable employees. With a furlough, employees typically retain their benefits and protections.

However, if the financial situation is one that seems like it will continue or that it will go on for longer than you can continue to support the payroll, then a layoff may be necessary.

It’s important to note that even in the event an employee is furloughed, they may wind up removed from the group health plan if they don’t work enough hours. In that event, they would likely need to sign up for COBRA or alternate insurance.

References

1. What is the difference between a furlough, a layoff and a reduction in force?