Navigating and implementing furloughs can be incredibly difficult for ministry leaders. Furloughs can cause confusion and frustration for all affected parties. Having a trusted attorney to help navigate rough times, especially when it comes to compensation and job security, is critical to your organization's longevity. We know no one wants to find themselves at either end of a furlough and hope the below FAQs will help you as you navigate this season. If you do not already have a trusted attorney, please contact us. We would love to help you and your organization succeed.
1. What is a furlough? A furlough is a temporary time off work. It is unpaid and is not typically voluntary. Employees expect to return to their jobs after the furlough is completed.
2. When should an organization furlough employees? Often, furloughs are commenced when an organization realizes its current employment budget will not be met with the necessary revenue. The more time ahead of the budget shortfall a furlough can be planned, the better.
3. How long can a furlough last? A furlough can be indefinite, but it may be wise to set expectations for suspected time frames and update your staff as the furlough progresses. Staff will feel the need to support their families and without regular updates, they may decide to pursue other opportunities.
4. How is a furlough different from a temporary layoff? A furlough can preserve the employment status of the employee, thereby preventing a disruption in benefits. A temporary layoff may trigger a loss of benefits, and the need to pay unused paid time off (PTO), depending on your policy.
5. What do I need to do to implement a furlough program? Your organization should approve a furlough policy or plan. This policy or plan should state how long the furlough intervals will last, and which benefits will be continued during the furlough (i.e. health insurance, accrued PTO, etc.) Your furlough policy or plan should identify which positions are necessary for continuation and which are eligible for furlough. Finally, you should clearly communicate the furlough, and its parameters, to your employees in writing.
6. Can employees work during a furlough? No. Any work for nonexempt employees will result in hourly wages and potential eligibility for overtime. Unless arrangements are made, any work for an exempt employee can result in a full week’s wages. However, if exempt employees are required to work only one day per week, they may be required to use their PTO for the remaining four (4) days. Employees for churches may volunteer during a furlough, but they should not volunteer in the same area of their employment.
7. Can a furlough have an impact on contract staff? Contract staff are subject to the terms of the contract they have with the organization. An organization may or may not be able to cut work to a contractor based on the agreement signed by the organization and the contractor.
8. Can we reduce salary levels? In general, yes. However, state and federal minimum wage standards cannot be violated. Furthermore, for exempt employees, they must meet the federal salary requirement per week to remain exempt.
9. Can we reduce the hours of nonexempt employees? In general, yes. However, please be aware that depending on your benefits policy, dropping below a certain hourly threshold could put an employee’s benefits at risk.
10. What kind of notice do we need to give employees? No amount of notice is typically required. However, written notice is highly advisable to avoid unapproved work. All time worked must be paid, regardless of when notice is received. Typically, employers try to give at least fourteen (14) days’ notice; however, in general, there is no legal requirement as to how much notice must be given.
11. Can exempt employees volunteer to be furloughed? Yes, both exempt and non-exempt employees can volunteer to be furloughed. In the case of exempt employees, salary deductions may be made for one or more full days of missed work. The employee's decision must be completely voluntary and it is recommended that the decision be in writing.
12. What do other organizations do to implement a furlough? Some organizations have a blanket furlough, which does not allow any work until the furlough is finished, and others will use a rotating furlough, which rotates staff every other week. Rotating furloughs minimize disruption to activities while allowing for mitigated financial impact on the employees. Rotating furloughs occur when fractions of the employee workforce are furloughed a week or two at a time, and take turns (like shifts).
13. What about our ministerial employees? Ministerial employees are exempt from many of the rules that lay staff may be subject to. When considering a furlough that will affect your ministerial employees, it may be likely that some of the rules, that would affect lay staff, will not apply to your ministerial staff. However, it is important to contact legal counsel to determine your responsibilities and employment liability to ministerial staff.
14. What other challenges or benefits should the organization be aware of? Employees who are furloughed are not likely eligible for unemployment. As you evaluate furloughs, let us know if you have specific questions or if you’d like to look at a sample furlough policy or sample furlough notice. We are here to help you navigate every season with confidence and peace of mind.
The information provided in this article does not, and is not intended to, constitute legal advice or investment advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information contained in this article may not constitute the most up-to-date legal or other information. This article contains links to other third-party websites. Such links are only for the convenience of the reader, user, or browser; the author does not recommend or endorse the contents of the third-party sites.
Readers of this article should contact their attorney to obtain advice with respect to any particular legal matter.
Anthony & Sparkman, PLLC is a law firm with attorneys located in both Dallas/Fort Worth and Kalispell, Montana that provides legal counsel to both churches and nonprofits around the world. John Anthony & Michele Sparkman have spent over a decade providing general counsel to churches and nonprofits on issues ranging from incorporation, governance, employment, policies and procedures, taxes, succession planning, real estate development, and much more. For more information visit our website at www.thenonprofitteam.com.
