Temporary Layoff

HR in TX · March 2003

Our company is one of the many feeling the effects of the downturn in the economy. We are waiting for some upcoming projects expected around mid-April. In the meantime we must temporarily layoff some employees until the projects arrive. My question is, do we have to actually terminate these individuals, or may we put them on an involuntary leave of absence? If the latter, how long may they be classified as being on an involuntary leave of absence? What are we required to do with these employees?

ray a · March 2003

In NY there are 2 layoff classifications, temporary and permanent. We typically, layoff permanently and tell people they may reapply when work picks up. But, our local DOL employment office will work with employers who use the furough (temporary) process. I suggest you contact your local employment office for advice.

Don D · March 2003

Unless you have a union contract or you know that the layoff is of a temporary, defined period of time, I suggest that you terminate the employment of these individuals. You do not want the appearance or suggestion that they are still employed thus perhaps 100% eligible for recall and perhaps eligible for continued benefits paid by for by you or for which you collect premiums. Labelling them 'Leave of Absence' will add no advantage to the company that I am aware of. In cases where you are fairly certain they will be called back or you have a definite shutdown period announced, I would keep them in employed status as temporary layoff. There are multiple exposures to the company when you do that and have no definite call-back prospects. In every case, however, they will draw unemployment if otherwise qualified, regardless of what you call them. Good luck. x:-)

TinaND · March 2003

We just faced the same situation. We put 34 employees on temporary layoff status. THey all went on COBRA eligibility and all other benefits were dropped. When i spoke with our lawyer and the unemployment office, temporary is "usually" determined as less than 6 months. They have now all returned - when they reach their anniversary dates, their vacation time earned will be prorated for the days that they did not work... All benefits were reinstated the first available date that they returned.

Good Luck

Theresa Gegen TX · March 2003

You basically can do whatever you want. You can put them on a leave without pay, for however long you want. They can complain, find other jobs, or sue for discrimination (like you selected me for leave because I was over age 40), just like they were terminated. The might also be able to get unemployment after the waiting period (7 days).

The question is, if you put them on leave, what are their benefits? Are you going to continue medical benefits, or put them on COBRA? Are you going to allow them to take any paid leave, during they time they are on leave without pay.

If the company decides to put them on leave, the company may want to consider giving the leave a drop dead date (for example -- tell the employee we don't have enough work right now, we anticipate having work by April, we are going to put you on leave until the work comes in. The leave will last a maximum of 60 days and your medical benefits will be continued by the company during that time. If the contracts have not come in at the end of 60 days, your employment will be terminated, your benefits will cease, and you will be sent COBRA notification. If the contracts come in between today and 60 days, we will call you back to work. Then you will have to tell the employee what is going to happen to paid vacation, ect (will they take it during leave?).

You should expect that some employees will find other employment and never return. A lot of people could not live without pay for a couple of months.

You could lay them off, then put the immediately on COBRA, and maintain a recall list. That way, you can recall employees as needed. Again, some employees will find alternate employment and never return.

Under the WARN act, if the reduction in hours lasts more than 6 months, it is considered an employment loss -- so if you are putting more than 50 employees on leave, you need to calculate the WARN Act consequenses.

Temporary Layoff

Comments