Difference Between Furlough and Layoff


The impact of the pandemic took the nation by surprise. Mandatory shutdowns, school closures, and social distancing rules disrupted business operations and employment. 

What was once thought to be a few weeks of inconvenience turned into months of chaos. With the economy suddenly grinding to a halt, many employers were unable to pay their workers. In an effort to hold on to their staff and ride out the effects of the pandemic, some employers choose to furlough their employees. For other businesses, laying off their workforce was their only option.

If you aren’t working and you aren’t getting paid, what’s the difference between being furloughed or laid off? 

You can learn more about furloughs and layoffs in this helpful guide. 

What is a Furlough?

When employees are required to take a mandatory leave of absence, that is known as a furlough

Furloughing employees avoids termination. With a furlough, there is an expectation that the employee will return to work once conditions improve at the company.

A furlough may happen in a few ways. 

  • Hourly employees may have their hours reduced. Or, they may be given no hours during the furlough until business conditions improve.
  • Salaried employees may be asked to take off several weeks of unpaid time during a certain time. On the other hand, an employer may furlough a salaried employee by alternating between a paid week and an unpaid week. 

Furloughed employees may be able to keep their health insurance and other benefits.  Your employer may ask you to reimburse them for health insurance premiums or any other benefits paid on your behalf while you’ve been furloughed. 

Before the pandemic, a furloughed employee’s ability to collect unemployment varied based on the state they worked in. Due to the pandemic’s extreme financial hardship, Congress extended unemployment compensation coverage to allow furloughed employees to collect unemployment benefits for unpaid time. 

What is a Layoff?

A layoff ends employment. The term “laid-off” implies that the employee was let go due to a lack of work and not due to their actions.

Many employers deem layoffs as temporary with the intent of rehiring staff when their operating conditions improve. Yet, in many cases, layoffs may be permanent. 

When an employee is laid off, they typically lose their health insurance and other benefits. However, some health insurance companies have eased their restrictions due to the pandemic’s far-reaching economic impact. So it may be possible for an employee who has been laid-off to keep their benefits. 

Employees who have been laid off would be eligible for unemployment benefits in the state that they work in. Laid-off employees also qualify to obtain health insurance coverage through the exchange outside their normal open enrollment period.

Furloughed or Laid-Off; Are You Eligible for Unemployment? 

Employees who are laid off are generally eligible for unemployment compensation. Since each state runs unemployment benefit programs, rules and requirements vary based on where you live. 

The eligibility for unemployment for a furloughed employee varies by state. Due to the pandemic, states have relaxed their rules to allow furloughed employees to collect unemployment. Keep in mind that when the pandemic emergency passes, states may revert to their original rules. 

Millions of people sought unemployment benefits as a result of the pandemic. Over time, this could cause an extreme financial strain on the states paying out the benefits. As a result, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March to provide additional financial relief and extend the period that unemployment benefits could be received. 

Since many unemployment benefits were slated to end during the last week of December, a new Act passed by Congress extended these benefits into 2021 as follows:

Federal Pandemic Unemployment Compensation (FPUC) 

Under this program, individuals were entitled to receive an extra $600 each week through July 31, 2020. This new Act revives this program by providing an extra $300 per week from December 26, 2020, through March 14, 2021.

Pandemic Emergency Unemployment Compensation (PEUC)

States typically limit the number of weeks that an individual can claim unemployment.  To help those in danger of exceeding the state’s limit, the original CARES Act added an additional 13 weeks of unemployment.  The new act adds an additional 13 weeks of unemployment.

Pandemic Unemployment Assistance (PUA)

The PUA extended unemployment benefits to people who were traditionally not eligible to receive them.  This includes people who are self-employed, independent contractors, or who have a limited work history. The new Act adds 11 weeks of benefits, which will now expire on March 14, 2021. 

Many states require people collecting unemployment to conduct regular job searches as a condition for receiving benefits. Due to the pandemic, states may have temporarily halted these requirements. If you are seeking unemployment benefits as a result of the pandemic, be sure to find out what your state requires. 

Strapped for Cash?

If you’ve been furloughed or laid-off, you may find yourself in need of some quick cash to pay your bills or to put food on your table. 

At the end of December, Congress passed a bill that includes a stimulus payment of up to $600 payment for each adult and dependent child based on household income. The House has since voted to raise the amount to $2,000 for each adult in the Defense Bill. 

If you need cash quickly, opening a MoneyLion RoarMoney account could get you these government funds up to 2 days earlier. RoarMoney accounts have no minimum balance requirement and offer cashback rewards for a small $1 monthly fee. 

In addition, MoneyLion offers a range of programs that may help you out when you need it most.


MoneyLion’s Instacash program is a quick way to get cash fast. If you qualify, you can get a zero-interest cash advance when you use the MoneyLion app to link your external bank account.

If your credit isn’t great, there’s no need to worry – this program doesn’t require a credit check. You may see the advance in your bank account on the same day.

Credit Builder Loan

You may be eligible for a Credit Builder Loans through MoneyLion. You can borrow up to $1,000. Credit Builder Loans are designed to help people improve their credit, so lending isn’t based on your credit score.

You’ll get a low APR on what you borrow. As an added bonus, when you make your payments on time, your credit score will improve.  

The Bottom Line

Being furloughed or laid-off is scary. Even if it’s only for a short time, your financial future is uncertain. Having the money to pay your rent or buy groceries may cause an enormous amount of stress on you and your family when you aren’t getting a paycheck.

But there is financial help when you’ve hit hard times. You can apply for unemployment benefits or look for pandemic related resources.

If you aren’t sure where to start, this detailed guide provides helpful information about filing for unemployment. You may be able to take advantage of special programs in your area. Additional resources specific to COVID-19 may be available

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