July 15, 2020 · Budget, Credit, Investment, Savings
This year, millions of Americans have been furloughed by their employers because of the effects of the COVID-19 virus pandemic on businesses. When an employee is furloughed, usually they experience either a forced reduction in working hours or they are suspended from working without being paid even though they are legally still employed. If you've been furloughed, we have a few suggestions below that may help you manage through it.
Furloughed workers may still have benefits such as healthcare and life insurance that were provided by their employer; that's something that any furloughed worker should confirm if they are uncertain about the status of their benefits. Also ask your employer about how you'll be expected to make benefit contributions while not being paid. Make sure you keep in touch with your employer and know exactly who to go to if you encounter any problems with benefits.
With reduced hours (or no hours at all), regular income has either diminished or stopped for furloughed workers. That may mean some tough decisions and actions for these sidelined workers. We'd like to present some options to consider and decisions to make that could assist you if you're furloughed.
With new laws in effect, you may be eligible for your state's unemployment payments while you are furloughed but not unemployed. Furloughed (and independent workers) who would not have qualified for unemployment benefits previously are now eligible because this past March, the new Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the definition of eligibility. The CARES Act is a major part of the federal economic stimulus plan to help workers and businesses during the COVID-19 pandemic.
Generally, states offer approximately 26 weeks of unemployment benefits, and now there is an additional $600 per week that is part of the federal stimulus plan. If you run out of your state unemployment benefits, then the U.S. government's stimulus plan can provide an additional 13 weeks of unemployment payments. Every state has different criteria for who can get payments, and you need to research your state's department of unemployment to check if you may be able to apply for payments. More information on state and federal programs is available at the U.S. Department of Labor's site.
Managing your money is especially critical while furloughed. On our blog we have more than a dozen practical suggestions for managing your money if your income has stopped or lessened.
The question above may seem odd; a normal assumption is that most employees want to return to work with their current employer, since most furloughed employees expect that they will be able to return to work at some future time. At some point the employer will provide a specific work restart date or set of conditions that must met before work can begin, and then it may start up operations again and bring employees back in phases. The furloughed employees are also likely to expect that they will keep any seniority level they held pre-furlough and go back to the same salary or hourly pay they had before.
However, for some employees, the furlough may be an opportunity to look for a better position in the same industry or change their career to an entirely different field. If you're considering a change, we talk about that option below.
You may not have a guarantee that your employer will bring you back; you need to think about whether your position could be eliminated while you're furloughed. You always have the right to seek new employment while furloughed, and you need to think carefully about it since your employer may not maintain your position. Even with the pandemic, a wide range of companies are still hiring. The first step in a job search is usually to update your resume and then your profile on job search and networking sites. On these sites there typically is a settings control that can be turned on to let job recruiters know that you're available and looking; be certain to turn that control on when you're ready. Talk to family members and friends about any opportunities they may know of, and don't forget to tap into any social networks you belong to that could connect you to friends or contacts that could help; these networks might include LinkedIn®, Facebook®, Instagram® and others. We have provided a downloadable checklist to help you work through your job search.
Consider if part-time work may be available to help your situation. As mentioned above, even though the pandemic has severely affected the economy, companies are still hiring, both for full-time and part-time positions. You should be aware that many of these roles cannot be performed at home; they require the employee to travel to a workplace and, quite possibly, interact with the public. Just a few of the types of part-time work that seem to be available now include personal services such as dog walking or yard maintenance, delivery jobs, food service operations, store stocking, retail sale associates, cashiers, home healthcare, warehouse workers and others.
Even if you're not looking for a new position, use your furlough time to look for ways to either improve your current skill set or learn something new that may make you more attractive to a potential employer. Especially during the pandemic there are a variety free or low-cost options for taking classes online—either from private companies or from colleges—and some companies may be offering free (that are usually paid) courses to help employees. Make a commitment to “learn to earn” if you have some extra time available.
Visit our Financial Education Center's Events & Seminars page to register for upcoming, free webinars on related financial topics.