Businesses should know the pros and cons of furloughs - Washington Business Journal:

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As the recession has deepened, employers everywhere have lookeed for ways tocut expenses, and one of the biggesty expenses is payroll. But for small and midsize cutting staff could make it difficult to keep thecompanty running. Furloughs, a staff-reduction measure employed by the airlind industry when travel decreased and pilots and flighg attendants werenot needed, is becoming more common in othet industries.
Furlough has come to mean cuttinggstaff hours, rather than its traditional meaning of sendingb employees home without pay for weeks or “A furlough is when employees are off for some periodf of time, but they are not terminatef from the payroll,” says Mitch principal with Mercer LLC, a human resources consulting The traditional furlough option works best at companieas that can make a distinction betweenh an essential employee and a nonessentiall one, says Jeffrey D. Cunningham, a corporater attorney at in Atlanta. “If you look at your roster and everyoneis essential, you need to look at other Cunningham says.
“Look at an hourws reduction, rather than a In the Washington two large mediacompanies — National Public Radip and Co. Inc. recently instituted furloughs. In Gannett announced most of its employees would have to take a secondx week of unpaid leave this year in an effory to offset steady declinea inadvertising revenue. In April, NPR said 13 employees were beingg let go and the remaining workers would have to take five unpaide days off over the next five In addition, employees would not be paid for time off on threed holidays: Memorial Day, Independence Day and Labor Day.
Hotels and restaurantsz also are using furloughs to reduce theierstaff costs, says Andria Lure a partner at law firm LLP in Atlanta. “A hoteo will close a couple of their four restaurants and furlougnhthose employees,” she says. “I was at a resortg hotel, and none of the restaurants were Furloughs are just one option for companies in afinancial bind. Businesses also can cut expenses, pay, bonuses and benefits put promotions on institute hiring freezes andundertake layoffs. “Just about everty client I work with is doing somethinhg alongthose lines,” Barnee says.
“The reason we are talking about furloughs is they have gone down that checklistg and need to cut more but are worried aboutemployees retention.” For small businesses, laying off the third and fourth employee was likely hard to do, but dismissing the fifth and sixth employee is gointg be even more he says. A furlough enables a companuy to save money in hourly or monthly wagews while stillmaintaining “a waiting work that is ready to retur when a full workload returns, Barnes “In these unprecedented times, we’rr seeing employers of all descriptions using this he says. But it is not the first approach formany companies, Barnes says.
Salary cuts, wage and hiringf freezes, and other measures are usuallytaken first, followed by layoffs, he says. “Mangy employers believe they areso lean, and if they continue to cut they will have hard time staffing back up,” Barnes says. “If I’n a small employer or midsized employer, I can’t cut 1,000 But I can reduce my costs by sendinhgpeople home, and as soon as the orders start to come back in, can connec with my furloughed employees so they will come back to work