Facing new financial pressures from COVID-19, a growing number of institutions are contemplating furloughs as a way to avoid layoffs, retain staff, and generate short-term salary savings. Some are indefinitely furloughing staff whose jobs cannot be performed remotely. Others are asking all staff to take a pre-defined number of furlough days.
But most institutions haven’t considered furloughs since the Great Recession, leaving leaders feeling unprepared. On top of that, leaders are grappling with whether and how to adapt the furlough approaches used a decade ago to today’s pandemic environment. To help leaders plan, EAB has identified six considerations for designing and implementing COVID-19 furlough plans that balance savings with staff support.
1. Minimize disruptions to employee benefits, where possible
Institutions should strive to maximize support for affected staff whenever financially feasible. While virtually all institutions continue to provide health benefits for furloughed employees, Marquette University and Sacred Heart University are going a step further by paying both the employer and employee portions of health insurance premiums. This gesture is particularly meaningful during a health crisis like COVID-19. On top of that, furloughed employees at Marquette University will retain their accrued paid time off and will continue accruing vacation and sick leave across the furlough period. Gettysburg College and Eastern Kentucky University have also sought to minimize disruptions for furloughed employees by continuing tuition benefits.
2. Help employees understand and apply for unemployment benefits
Beyond providing ongoing institutional benefits, leaders should help staff understand their eligibility for unemployment benefits and encourage eligible employees to apply. In particular, they should highlight the temporary federal supplement afforded by the CARES Act. Some institutions—like Washington University in St. Louis, University of Rochester, and Ithaca College—have explicitly said they expect furloughed employees to recoup their lost wages in full through the combination of state and expanded federal unemployment benefits.
The University of Michigan has nudged staff to apply for unemployment benefits by emphasizing that furloughed employees could receive up to $962 per week in Michigan. Rensselaer Polytechnic Institute’s furlough FAQ page includes guidance on filing unemployment claims and links directly to the relevant online application. Furthermore, RPI has designated an institutional contact for employees who need assistance navigating New York’s application process.
However, leaders should remember that COVID-19 has prompted a record number of unemployment applications. This surge in requests has overwhelmed some state agencies and unemployment systems, resulting in delayed approvals and disbursement. On top of that, the $600 weekly supplement afforded by the CARES Act is only available through July 31, 2020. Several institutions—including the University of Montana and University of Tulsa—have therefore intentionally scheduled extended furloughs to end at the same time so employees won’t experience a sudden income reduction prior to returning to work.
3. Implement furloughs in an equitable and transparent manner
Besides ensuring employees have access to maximum benefits, it is critical that leaders plan and implement furloughs in a fair and transparent manner. Leaders should provide a clear rationale for furloughs amid COVID-19 and ensure certain employees are not unfairly targeted. For example, the University of Wisconsin System’s interim furlough policy prohibits employees from being furloughed as a disciplinary measure or based on involvement or support (or lack thereof) for any labor union. Leaders should also explain how employees will be selected for targeted furloughs. For example, the coronavirus addendum in the University of Rochester’s revised policy states that leaders will prioritize furloughing staff who are not working full time (either in their regular or a reassigned position). However, they will only make decisions after evaluating the employee’s skills and competencies, performance, and seniority.
When implementing furlough plans that affect all or most staff, leaders should consider adjusting the number of required days based on employee paygrade. This allows institutions to reduce the financial burden on employees with less discretionary income (for whom salary reductions are most likely to have an outsized negative effect). For example, the University of Arizona and Boise State University have both released tiered furlough plans in which lower salaried employees take fewer days—and experience smaller corresponding pay reductions—than higher salaried employees.
4. Develop a scheduling strategy that balances employee preferences with institutional needs
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After settling on a number of furlough days, institutions must decide when and how to schedule them. Some institutions opt for intermittent assignments (i.e., one-off days typically spread over a longer time period), while others use—or allow employees to choose—consecutive assignments (i.e., multiple days taken in a row). Leaders must also determine whether to allow employees to self-select their days (i.e., schedule independently based on personal preferences) or designate institution-wide days (i.e., choose fixed days on which all staff must take furlough).
When weighing these options, leaders should consider factors like:
- Staff workflows and morale. Allowing employees to self-select days may boost morale, but it also can pose challenges for supervisors trying to manage workflows.
- Feasibility for different operational units and employee classifications. Self-selection or consecutive assignments may not be realistic for some units—like public health and safety—that must maintain consistent staffing levels to ensure ongoing safety and basic operations.
- Coordination requirements. Allowing staff to self-select days would require unit leaders to coordinate within and across teams to ensure daily operational needs are still met. Designating institution-wide days may reduce the coordination burden on unit leaders since daily operations will cease during the furlough.
- Service coverage. Intermittent assignments could allow the institution to continue providing most if not all daily services, thereby avoiding extended service outages.
- Potential energy savings. Closing campus on designated institution-wide days could help save energy, although this may be irrelevant in the short-term due to stay-at-home orders and campus closures.
Amid COVID-19, several institutions are striking a balance between employee preferences and institutional needs by giving employees scheduling flexibility within certain parameters. At Boise State University, employees can self-select furlough days (intermittent or consecutive) if they submit a form prior to May 1, 2020. Otherwise, days will be selected for them. Supervisors at the University of Arizona are encouraged to give employees flexibility in scheduling days (intermittent or consecutive). However, they are also expected to take cost savings into consideration, and individual units can opt to schedule designated days. In contrast, the University of Tulsa is furloughing 595 staff for a continuous two-week period before June 30, 2020. These furloughs will be divided into four windows of time, with supervisors coordinating among their teams to schedule furloughs in a way that “best accommodates individual needs yet preserves university operations.”
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5. Consider giving staff the opportunity to take voluntary furloughs
While many institutions will need to implement mandatory furloughs to sufficiently address budget deficits, creating a voluntary furlough option can help leaders minimize the number or duration of required furloughs. It also gives staff a safe and flexible way to temporarily step away from work amid this pandemic. In fact, the University of Pittsburgh’s Chancellor pointed out that some staff might be better off taking a voluntary furlough and collecting expanded unemployment benefits provided by the CARES Act.
In that spirit, the University of Michigan recently launched an extended voluntary furlough program and Vanderbilt University is developing a short-term Voluntary Staff Departure Incentive Program. Several University of Wisconsin campuses have also announced voluntary furlough options alongside mandatory furloughs, while Boise State University has created a simple online form for staff to volunteer to take intermittent furlough days.
6. Carefully review all furlough requirements and restrictions
Before implementing any of these considerations, institutions must ensure their plans comply with federal, state, and institutional policies and regulations pertaining to furloughs. The checklist below provides a starting point, but leaders should continuously consult their legal counsel when developing a furlough strategy.
- Restrictions for exempt/non-exempt employees (Fair Labor Standards Act)
- Rules for employees on leave (Family and Medical Leave Act and Emergency Family and Medical Leave Expansion Act)
- Federal advanced notification requirements (Worker Adjustment and Retraining Notification Act)
- Federal unemployment rules and guidelines
- Restrictions on furloughing authority and circumstances
- Restrictions on furlough structure and implementation
- State-specific unemployment rules and guidelines
- State-specific advanced notification requirements (mini-WARN acts)
- Standing policies on mandatory and/or voluntary furloughs
- Contract terms and/or collective bargaining agreements
- Terms of health and retirement plans
- Standing policies on outside employment and/or second jobs