At the quarterly faculty/staff assembly at Stillman College last August, several employees expressed concern about potential layoffs. “I said I would do whatever was necessary to ensure that everyone could keep their jobs,†said Ernest McNealy, president of the Tuscaloosa, Alabama-based HBCU, who thinks of his employees as family. After consulting with staff managers and human resources, McNealy concluded that furloughs were a better option than layoffs and decided that all of the non-teaching employees would have to participate, including himself.
When an employee is furloughed, he/she is required to take a day off without pay. Although furloughs don’t always save as much money as layoffs, they prevent employers from terminating members of a skilled and valuable workforce. With the number of unemployed in the U.S. reaching 14.5 million in May, news that a company will require its employees to take time off without pay may be inconvenient, but compared to a pink slip it is welcome news to most.
Nathaniel Alston, a former national president and a founder of the National Association of African Americans in Human Resources, thinks that furloughs create less dissension than pay cuts and that employees feel like furloughs are temporary. “‘Furlough’ even sounds better than ‘pay cut,’†says Alston, CEO of the Horizons Group, a Maryland-based human resources consulting firm. With a pay cut, he explains, employees are left with the feeling that they’ll never get their previous salary back.
Stillman College designated two furlough days in March, and employees will also be furloughed for two days near the July 4 holiday weekend. This strategy will allow the school to dramatically reduce its energy consumption and the campus will be closed for several days during the hottest time of the year. McNealy anticipates that the July furlough will save $500,000. The furloughs along with other cost-saving methods (utilities abatement and reduced travel) will allow the school to fill a $1 million shortfall.
Take note of Alston’s advice to employers and employees on how to smoothly and effectively implement a furlough program.
ADVICE TO EMPLOYERS
Communicate. Explain to your employees that after calculating all of the options, a furlough is the best
decision. McNealy and Stillman College’s chief financial officer spoke with the chairs of the academic departments and staff managers to keep the HBCU’s workforce apprised of the college’s financial situation.Define the terms of the furlough and make sure that employees have an opportunity to ask questions. “Involve your senior human resources person and the head of the company,†says Alston. “Tell them that instead of laying off 50 people, we are going to furlough 200 people but everyone will keep their jobs, and tell them how we’re going to accomplish that.â€
Consider a tiered furlough system. Try to reduce the economic burden on lower paid employees by implementing a tiered furlough system that will give higher salaried employees more days off without pay. “Usually, the people who are highly compensated can make out [okay] on a furlough,†says Alston.
Give ample notice. Try to plan furlough days well in advance to give employees enough time to prepare financially, advises Alston. Spread the furlough days across a period of time instead of insisting that they all be taken during one pay period. McNealy alerted his staff and faculty about the furlough plan in February and scheduled furloughs in March and July, which allowed for a break between decreased pay periods.
Don’t force employees to work. Employers must make sure that they abide by the federal Fair Labor Standards Act (FLSA). Non-exempt (hourly) employees can be easily furloughed, but exempt or salaried employees are entitled to full weekly salaries for any week they perform work, even if it is less than a day’s work. As such, employers can only furlough exempt employees for an entire week, not day by day.
Despite the law, some employers make employees feel obligated to work on a furlough day. Alston highly recommends that HR departments enforce furloughed days within FLSA guidelines and reduce the risk of workers compensation problems.
ADVICE TO EMPLOYEES
File for unemployment insurance. Eligible furloughed employees can apply for unemployment benefits depending on the state they live in. Be diligent about understanding when and how to file, says Alston. In most cases, payments are not retroactive. For more information, visit your state’s unemployment office or contact the U.S. Department of Labor.
Get paid or gain experience. If it won’t strain your wallet, consider using your time off to volunteer or pursue another professional development. Take a class, obtain certification for a skill set, or volunteer your professional services to keep your faculties sharp. If money is an issue, seek out freelance, consulting, or part-time work to make up for lost income. Or use this time to start your dream business.
Relax, and conserve money and energy. For most, this isn’t a time to spend a ton of money–throwing a big backyard barbeque for all of your friends and family, or taking an extravagant three-day-weekend vacation. Alston suggests that you think of your furloughed days as a time when you will be able to save money on gas, food, and other incidental expenses that occur throughout the workday. Finally, relax and enjoy the benefit of having a day off so that you will have plenty of energy to face the mountain of tasks that will pile up while you are gone.