Companies that are struggling may decide to furlough their employees. In general, a furlough allows the company to save money on payroll without outright terminating employees. In difficult circumstances, a furlough may be the best available option — as opposed to a layoff — for the employer and employees, but there are obvious downsides.
Reduction in hours or pay
A furlough is generally used to keep employees on staff while paying them less or not at all. For hourly employees, a furlough could take the form of reduced work hours or no work hours. For salaried employees, a furlough could mean reduced pay or no work. In some cases, employers (unintentionally or not) misclassify salaried/exempt employees by reducing their pay so much that it invalidates their exempt status or even their right to a minimum wage.
A temporary measure
A furlough is supposed to be temporary, and often the employer will state an end date for the furlough. In most situations, employees are furloughed with the understanding that their work hours will be restored once the business is making a profit again.
Furloughs and employment law violations
Under California employment laws, your employer must pay you at least the minimum wage and compensate you for every hour that you’ve worked. During a furlough, you also retain your right to meal and rest breaks. Non-salaried employees must be paid overtime wages if they work more than eight hours in a single workday, even during a furlough. You should also speak with an employment law attorney if, during your reduced-pay furlough, your employer has misclassified you as managerial or exempt when your reduced pay rules out that classification.