Words count. Layoffs, reductions in force, furloughs — it’s critical that you call workforce reductions by their correct names to avoid headaches down the road.
Example: You don’t want to tell an employee you’re laying him off if you have no intentions of recalling him when business picks back up. It could result in countless phone calls from the person wondering when he can come back or — worse yet — legal trouble.
Three types of staff reductions
Furlough. The idea behind a furlough is to share the burden so companies can avoid layoffs. Everyone works reduced hours so all employees can keep their jobs.
Example: A company may furlough non-exempt workers one day a week for three months. Then the company can pay workers for 32 hours instead of 40.
If the company has exempt employees, furloughs can be tricky. Most companies furlough exempt employees for a specific number of full weeks during the year. And since employees’ work weeks aren’t split, their exempt status isn’t jeopardized under the Fair Labor Standards Act (FLSA).
Layoff. Usually layoffs are the solution companies use when the lack of available work is expected to be temporary.
When companies lay off employees, it means the employer expects to recall workers when business picks up again.
Reduction in force (RIF). When a company permanently cuts back on its staff, the move is called a RIF.
RIFs also can occur when the company decides laid off employees will not be recalled to work.
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