Furloughs Gain as Means to Control Costs, Hay Study Finds
Among more than 100 U.S. organizations polled, more than one-third either has a furlough policy or is using furloughs as a way to control costs. Within that group, half anticipate using furloughs to cut costs for six to 12 months. And while furlough maximums vary from four days to one year, more than half of those using them or that have a furlough policy, don't have an established maximum length, the Hay Group found.
"It was really clear to us that this was becoming a bigger issue than we thought at the time, and it was more pervasive than we thought," said Marie Dufresne, a senior consultant and national benefits practice leader for the Hay Group.
Among those using furloughs or who have a furlough policy in place:
- About 75% of those on furlough are nonexempt employees; about 68% are exempts or equivalent.
- 65% do not allow employees to volunteer for full- or partial-length furloughs.
- 71% indicated compensation levels are being cut commensurate with time off; 52 percent indicated incentives would not be impacted due to reduced annual pay.
- 75% indicated accrued, allotted vacation or floater time continues to be accrued during furloughs.
- More than 60% continue employees' health care benefits during the furlough period but are required to pay the employee's contribution portion.