COVID-Related Furloughs May Result in Penalty Pay Obligations for Employers

It is no secret that the current Coronavirus related furloughs by California employers are really – or will soon lead to – layoffs.  When employers realize that they cannot (or do not want to) bring furloughed employees back, they will send out a notice converting the furlough to a termination.  Indeed, this is already happening in many industries. 


California law provides that when an employee separates from their employment, they must be paid out all wages due within 72 hours.  Yet employees are not being paid accrued vacation pay/PTO, as well as other types of wages such as earned commissions, in the event of a furlough.  Because we believe that when a furlough is followed by a termination, the furlough is actually no different technically than a termination, it is the furlough that triggers the Labor Code’s final pay requirements.


If we are correct on this theory, it means that hundreds of thousands of California employees who have been furloughed will soon become eligible for an extra 30 days of penalty pay pursuant to California Labor Code Section 203.  Therefore, it is important that if you have been subjected to a mass furlough you contact us by filling out the contact form so that we can review your case and potentially file a claim on your behalf.  


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