What furlough payment is and how it differs from a layoff
A furlough is a temporary, unpaid leave of absence. Your employer tells you to stop working for a set period—anywhere from a few weeks to several months—but you remain employed. You do not receive a paycheck during the furlough period, but you keep your job title, seniority, and benefits (though some benefits may be suspended). A layoff is permanent; a furlough is meant to be temporary.
The key difference in payment: during a furlough, you earn nothing. Your employer is not paying you to stay home. You do not accrue paid time off during a furlough unless your contract or union agreement says otherwise. When the furlough ends and you return to work, you resume your normal paycheck at your normal rate.
Furloughs are most common in government jobs, education, nonprofits, and industries hit by sudden downturns—like hospitality and airlines during economic shutdowns. Private employers can furlough workers too, though they more often lay off instead.
Key Takeaways
- During a furlough, you receive no paycheck, but you remain employed and keep your job when the furlough ends.
- Your employer must tell you the furlough start date, end date, and whether you will be paid for unused vacation or sick time before the furlough begins.
- You may be able to file for unemployment during a furlough, depending on your state and the furlough length.
- Health insurance and retirement contributions may pause during a furlough, so confirm with your HR department what happens to your benefits.
- If a furlough becomes permanent, your employer must notify you; at that point it becomes a layoff and you may be owed severance.
When you stop getting paid and when payments resume
Your last paycheck before the furlough covers work up to the furlough start date. If your employer furloughs you on Monday, your last paycheck (for the previous week or pay period) arrives on the normal schedule. Starting the day the furlough begins, you receive no income from your employer.
The furlough end date is when you return to work and resume earning a paycheck. If you are furloughed from June 1 to June 30, your first paycheck after the furlough covers work beginning July 1. The timing of that paycheck depends on your employer's pay schedule—weekly, biweekly, or monthly.
Some employers pay out unused vacation or sick time before the furlough starts. Others hold that payout until you return. Ask your HR department or payroll office which applies to you, and get the answer in writing. This matters because that payout may be your only income during the furlough period.
What happens to your benefits during a furlough
Health insurance, retirement plans, and other benefits vary by employer and by the furlough length. Federal employees on furlough typically keep their health insurance active, but they do not contribute to it during the furlough (the government covers the employer share). Private employers have more flexibility and may suspend benefits entirely, continue them at your cost, or continue them at no cost.
Retirement contributions—401(k), pension, or similar—usually pause during a furlough. You cannot contribute if you are not being paid. When you return, contributions resume at your normal rate. Check with your benefits office about whether the furlough period counts toward vesting or service credit; this varies widely.
Life insurance and disability insurance may also pause. Before your furlough begins, contact your benefits administrator and ask for a written summary of what happens to each benefit. Do not assume; ask.
Filing for unemployment during a furlough
You may be able to file for unemployment during a furlough, but the rules depend on your state and the furlough length. Most states allow unemployment claims if you are furloughed for more than a week or two. Some states treat furloughs as temporary layoffs and pay partial unemployment; others do not.
To find out, contact your state's unemployment insurance office or file a claim online through your state's labor department website. When you file, you will be asked whether you expect to return to work. Answer honestly: if you are furloughed, you do expect to return. Some states will still pay you; others will not. The only way to know is to file and see what your state says.
If you receive unemployment during a furlough and then return to work, you must report your return to the unemployment office. Continuing to claim unemployment after you return to work is fraud.
What to do if a furlough is extended or becomes permanent
If your employer extends the furlough—pushes back the return date—you will be notified before the original end date. Ask for written notice of the new end date. If the furlough is extended multiple times, it may signal that your job is at risk. Start looking for other work while you still have a job title to list.
If your employer tells you the furlough is now permanent, it has become a layoff. At that point, you are no longer employed. Some employers offer severance pay (a lump sum based on years of service), but they are not required to unless your contract or union agreement says so. Ask your HR department whether severance is available and what you must do to receive it.
Once a furlough becomes permanent, you may also be owed final pay for any unused vacation or sick time, depending on your state. Some states require employers to pay this out; others do not. Check your state's labor department website or call to confirm.
How to prepare financially for a unpaid furlough
If you know a furlough is coming, start building a cash reserve immediately. Calculate how many weeks or months you will not be paid and set aside enough to cover essential expenses—rent or mortgage, utilities, food, insurance premiums. Do not count on unemployment; it takes time to process and may not be approved.
Before the furlough starts, confirm with your employer whether you will receive a payout for unused time off. If yes, ask when that payment will arrive. If no, that income is gone. Review your benefits to see what will be suspended and what will continue; if health insurance will be suspended, look into COBRA (which lets you keep your employer's plan for up to 18 months, though you pay the full premium) or the Affordable Care Act marketplace.
Contact your creditors, mortgage lender, and utility companies before the furlough begins. Many will work with you on payment plans or deferrals if you explain the situation in advance. Waiting until you miss a payment makes it much harder to negotiate.
Frequently Asked Questions
Do I have to accept a furlough, or can I refuse?
In most private-sector jobs, you can refuse a furlough, but your employer can then lay you off instead. In government jobs, furloughs are often mandatory. Check your employment contract or union agreement. If you refuse and are laid off as a result, you may be owed severance depending on your state and contract.
Will a furlough affect my credit score?
A furlough itself does not appear on your credit report. However, if you miss payments on credit cards, loans, or other debts during the furlough, those missed payments will be reported and will lower your score. Contact your lenders before you miss a payment to discuss options.
Can my employer change the furlough end date without notice?
Legally, your employer can extend or shorten a furlough, but most employers give notice before the original end date. If your employer changes the date without warning, ask for written confirmation of the new date. If the furlough is repeatedly extended, treat it as a sign that your job may not come back.
What if I find another job while furloughed?
You can take another job during a furlough. If you do, you must report the income to your state's unemployment office if you are receiving unemployment benefits. Taking a new permanent job may also end your furlough status—some employers will not hold your job if you accept permanent work elsewhere.
Do I have to pay back benefits if I don't return after a furlough?
No. If your employer continues your health insurance or other benefits during a furlough and you do not return, you do not owe the cost of those benefits back. However, if you received unemployment benefits and then did not return to work, you may owe back the unemployment payments depending on your state's rules.