Furlough is when an employee is placed on a temporary, unpaid leave at the request of the employer. An employer would place an employee on furlough when they don’t need them to work for a specific period of time—like a downturn in business, or seasonal demands—but the employee is expected to return at a later date.
Other leaves of absence only differ in that they’re based on the employee’s request—for personal and/or medical reasons—instead of the employer requesting the leave.
How to handle a furloughed employee in Gusto
Furlough and leaves of absence are handled the same way through Gusto. Instead of dismissing the employee, you'll need to skip them on payroll to "furlough" the employee.
Follow the steps in this article to skip them on payroll until they return to work. You'll see the usual per employee charge on your invoice for this individual—skipping them on payroll(s) does not change the price per employee.
Furloughed employees who have benefits with Gusto
Skipping an employee’s payroll (i.e. placing them on furlough), will not terminate their benefits. However, carriers’ rules differ—to be compliant, you’ll need to reach out to your carrier to find out how long an employee can keep their health benefits while they're not actively working.
Once an employee returns to work and is paid through payroll, we’ll apply catch-up deductions to capture the deductions that were missed when payroll was not run for that employee. During the months that the employee is on furlough/leave, the employer is still responsible for paying the entire health insurance invoice to the carrier. This means that you’ll be covering the employee’s portion of the premium until we’re able to reinstate deductions upon the employee’s return.
COVID-19 & carrier flexibility
Some carriers are loosening their requirements on furloughs and insurance premiums in light of the impact COVID-19 is having on small businesses. Reach out to your carrier to find out how long an employee may be placed on furlough/leave while continuing insurance coverage and whether or not they’re offering options on premium invoice deferrals during this time.
To read about the difference between dismissing an employee and placing them on furlough/leave of absence, read this article.
Dismissing or laying off an employee
If an employee is not being furloughed, and will not be coming back to the company, follow the steps to dismiss them in Gusto.