National Law Journal

Employment lawyers predict that furloughs may lead to lawsuits
Tresa Baldas
May 18, 2009

Furloughs may be the strategy du jour, but they might be the lawsuit of tomorrow.

So warn employment lawyers, who foresee a growing number of wage-and-hour lawsuits associated with furloughs, particularly as they become more popular.

In a recent survey of 245 large companies by Watson Wyatt Worldwide Inc., 10% of employers said they had offered unpaid time off, and an additional 9% said they planned to do so in the next year.

Furlough-related lawsuits are only a matter of time, predict management-side attorneys, who believe that the temptation for some employees to work outside the office will get too great, exposing an employer to liability. Blackberry use, checking emails or voice mail — anything that employees do while on furlough-leave can be considered work, they warn. And if it's work that's benefiting the company, it has to be compensated under the Fair Labor Standards Act.

"Be very cognizant of the fact that a lot of employees — your good employees — have a hard time letting go. They'll check their e-mails. They'll check their BlackBerrys. They'll check their voice mails," said Kevin Vance, a partner in Miamii office of Epstein Becker & Green. "If they do any of those things, they're working...but that's a no-no if they're on furlough."

Vance's law firm recently hosted a workplace seminar in Miami on alternatives to layoffs, where furloughs became the hot topic of conversation among in-house counsel, management-side lawyers and human resource personnel.

"It's a topic that's coming up left and right, " Vance said. " We expect that there will be litigation in the future, but if the employers do it right, there shouldn't be."

Vance, who advises employers on workplace matters, offered the following advice to employers seeking to implement furloughs. First, he stressed, if employers furlough exempt employees — those who are paid salary and not entitled to overtime — they should do so for a full week. He cautioned that if an exempt employee works anytime during a given week — even for a few hours — they have to be paid their whole salary.

To avoid that, Vance also recommends that employers take away everyone's company-issued BlackBerrys and laptops for the week.

Greg Rasin, a partner at New York's Proskauer Rose, said that furloughs are gaining in popularity, but they're not as popular as some of the hype has made it seem. "I think there's a tremendous amount of talk about it. I think that more employers are using it than were using it in 2008 and 2007, but I don't think the numbers are very large," Rasin said.

Still, Rasin advises those who are using furloughs to make sure the affected employees are taking the unpaid leave and not working while away from the office.

"If you have nonexempt employees who you require to check memos or be on telephone calls or to do work during other than work hours, they have to be compensated for their time," Rasin said.

Meanwhile, Brian Jackson, an attorney in the Chicago office of Atlanta's Fisher & Phillips, believes that furlough-related lawsuits are inevitable.

"I think it's more than just a risk. It think it's going to happen. I think employers just don't understand what it means to work. Employers think that if you're doing things like listening to voicemails [or] reviewing e-mails or policies, that that's not really work. However, the courts are not really going to agree with this," Jackson said.

Jackson also believes that while employers may have a policy in place that strictly prohibits any work by furloughed workers, some employees still won't listen. "You may have a group of employees that say, 'On the one hand, there may be a policy that says we're not supposed to work,' " Jackson said, "but on the other hand, there's a culture that expects certain work to be done."