Furlough v. Lay-Off
As described, a furlough may be preferable to employers because it may streamline the process of getting fully staffed once the economy improves. It reduces the time and costs of recruitment.
Under a furlough, an employee remains an employee, but no longer receives compensation. At the beginning of the furlough, the employee should be paid all final wages, including accrued vacation time. Ideally, you should provide the employee with an estimate (not a promise), when they will be asked to return from furlough.
Employees who are placed on furlough are not entitled to paid sick leave or other leave during the furlough. However, regardless whether an employee is placed on furlough or laid off, they are entitled to unemployment benefits.
Mandatory Documents On Separation
Regardless whether employees are laid off, placed on furlough or fired for cause, they are entitled to certain documents. One is a change in relationship (attached), also a DE 2320 which describes EDD Unemployment Programs (attached) and, if the employer provides health insurance benefits, a COBRA packet (obtained through your benefits provider).
Employees should be directed to the EDD website to apply online for unemployment benefits. https://www.edd.ca.gov/about_edd/coronavirus-2019.htm Importantly, employees are eligible for unemployment benefits even if they have experienced only a reduction in hours, as opposed to a full-blown furlough or lay off.
Note: the recent CARES Act also provides enhanced unemployment benefits, to the tune of $600/week for up to 4 months. This is under the Relief for Workers Affected by Coronavirus Act. Employees pursue these benefits through their state unemployment insurance provider. In other words, they should be able to get those additional benefits simply by applying for unemployment at the link above.
Enhanced Paid Sick Leave
The Families First Coronavirus Response Act provides for enhanced paid sick leave in addition to paid sick leave already provided by employers under the state and municipal (i.e., LA City & County) paid sick leave. This is a fairly complicated law, but the gist is that full-time employees are entitled to an additional 80 hours of paid sick leave for illness or circumstances related to COVID-19. There are 6 categories, and the pay rate depends on the reason for the paid sick leave. Employers can obtain reimbursement for these enhanced paid sick leave wages through tax credits. (Consult with your accountant.)
Emergency Family And Medical Leave Act Leave
E-FMLA is another Act within The Families First Coronavirus Response Act. It provides up to 80 hours of leave for parents of children whose schools are closed or other day care is unavailable as a consequence of COVID-19. Here, again, the government will provide financial relief for the payroll costs associated with this E-FMLA through tax credits.
Regarding both paid sick leave and E-FMLA, I discussed them in more detail in the attached California Employment Law Bulletin.
Most Important Rule
The most important rule, with regard to laying off employees, furloughing employees, reducing hours or re-hiring, is to always do so in a nondiscriminatory manner. The following are recognized classifications under California law to which employees may point to suggest they were a victim of discrimination: race, national origin, disability, religion, religious practices, sex, age, citizenship status and genetic information.