Labor Law

FAQ on Furloughs and Layoffs in the Public Sector

This memorandum offers answers to some common questions that union members may have in light of the threats of furloughs and layoffs due to financial emergencies caused by COVID-19. 

What is a furlough and how is it different than a layoff?

A “furlough” is when an employer temporarily reduces an employee or group of employees’ work schedules.  For example, a furlough plan could involve a 12-day reduction.  That reduction could be implemented by reducing employee schedules from 5 days to 4 days per week for 12 weeks, or one day off per month.  Employees would not be paid during furlough days. 

A “layoff” is when an employer permanently eliminates entirely a position or positions within a department or unit. 

Can my public employer unilaterally impose a furlough or layoff?

Public employers in New Jersey whose employees are represented by a union are required to negotiate with the union prior to the implementation of a furlough plan.  That means that if a public employer unilaterally implemented a furlough plan, it has violated the New Jersey Employer-Employee Relations Act by failing to negotiate in good faith.  This would also arguably be a repudiation of the contract with the union. 

On the other hand, public employers are legally permitted to implement a layoff plan without negotiating with the union.  However, public employers are required to negotiate the effects of a layoff plan upon demand by the union.  Civil Service employers must comply with certain rules prior to a layoff including the requirement that they submit a layoff plan to Civil Service for approval.

What does it mean for the furlough plan to be negotiable?  What can/should we be seeking in negotiations?

“Negotiable” means that the public employer must negotiate with the union in good faith until impasse before implementing a particular proposal.  In the case of furloughs, the implementation of a furlough plan itself and the specifics of the plan are generally negotiable.  When presented with a furlough plan, the union may want to seek the following:

Who the employer is seeking to furlough, e.g., all employees or only employees deemed “non-essential”;

What was the basis for determining that the employees selected performed non-essential duties;

Economic information that substantiates the public employer’s asserted need for the scope of its furlough plan;

The effect upon seniority;

Guarantees in exchange for agreement over furloughs or other reductions in benefits.   For example, a union might agree to furloughs or to defer raises so long as the employer agrees that there will be no layoffs.  Should layoffs occur, employees would be made whole.

Can we negotiate over the effects of our public employer’s layoff plan?

Public employees should consult their collective negotiations agreement to determine the extent to which layoff procedures, such as considerations of seniority, have already been negotiated.  In such circumstances, an employer may not have a continuing obligation to negotiate.  However, an employer would be obligated to negotiate if the employer unilaterally changed a practice or created a new rule governing layoffs.   

We demanded negotiations over our public employer’s furlough plan, but the employer is insisting that this is just a “temporary layoff” so it has no legal obligation to negotiated.  Is this true?

No.  The New Jersey Supreme Court recently made clear that furloughs are mandatorily negotiable, unless a law either preempts negotiations or represents a clear expression of public policy authorizing a public employer to implement furloughs unilaterally.  Matter of Robbinsville Twp. Bd. of Ed. v. Washington Twp. Educ. Ass’n, 227 N.J. 192 (2016).   There is currently no such law on the books in New Jersey.

Our contract does not address how many hours/days per week employees work.  Does this mean that our public employer may implement a furlough plan without first negotiating?

Not necessarily.  As an initial step, the union should demand negotiations over a public employer’s decision to furlough. This is because a furlough is a change to work hours and compensation, which are core terms and conditions of employment and therefore mandatorily negotiable.   If the contract is silent on work hours, however, the employer may not have an obligation to negotiate unless there is a practice of employees working certain hours per day or week.  When in doubt, seek to negotiate.

We demanded negotiations, but the public employer has either not responded or has already implemented furloughs.  What can we do?

If a public employer has ignored a union’s written request for negotiations over furloughs or the impact of a decision to lay off, the remedy is to get legal assistance to file an unfair practice charge with PERC and seek interim relief – an order from PERC requiring the public employer to engage in good faith negotiations and restore the status quo (i.e., end the furloughs) pending the outcome of such negotiations.

What happens to my health benefits if I am furloughed or laid off?

Employees should review their contracts and employer’s summary plan description to determine the specific eligibility requirements for health care benefits. 

Generally, furloughed employees will continue to be eligible to receive health care benefits so long as they remain full time employees.  However, if an employee’s hours dip below a certain amount per week, they may be deemed a part-time employee and lose eligibility for benefits from their public employer.  In that case, an employee may be eligible for COBRA continuation coverage and/or to purchase health insurance benefits from the marketplace established by the Affordable Care Act. 

However, even where employees retain sufficient hours to be eligible for health care benefits, to the extent that employee contributions to health care premiums are tied to salaries (i.e., Chapter 78), a reduction in salary caused by a furlough plan may have an effect on the amount of an employee’s contribution if it takes their salary below a particular threshold.

I have been furloughed or laid off.  What programs am I eligible for?

While eligibility varies by law and by an employee’s particular situation, the following programs offer benefits for employees who have been furloughed or laid off.

Unemployment Insurance

New Jersey Family Leave Insurance

Temporary Disability Insurance

I was on an approved leave and now my public employer is implementing furloughs and layoffs.  Is my job protected?

While the answer depends on the employee’s specific situation and job title, and the public employer’s plans, an employee may not be laid off or furloughed because she is on a job-protected leave, such as FMLA or NJFLA.  However, an employee on such a leave may still be laid off or included in a furlough plan, so long as the employer’s plan treats all similarly situated employees equally.  Employees on job-protected leaves who are furloughed may require a recalculation of their benefit elgibility.  For example, an employee who is out for 12 weeks of FMLA leave, and whose leave eligibility was calculated on a 5-day workweek should request that the employer calculate and provide a new return date that accounts for any furlough days.