Rules on Federal Government Furloughs

A furlough is the placing of an employee in a temporary nonduty, nonpay status because of lack of work or funds, or other nondisciplinary reasons. There are two main types of federal government furloughs — a “shutdown” or “emergency” furlough and a “save money” furlough.

In a “shutdown” furlough, the agency no longer has the necessary funds to operate and must shut down those activities which are not excepted by Office of Management and Budget (OMB) standards. In many cases, the agency will have very little lead time to plan for the furlough, making it an “emergency” furlough. An example of a “shutdown” or “emergency” furlough is if there are no funds appropriated for an agency by the start of a new fiscal year.

A “save money” furlough is a planned event by an agency which is designed to absorb reductions necessitated by downsizing, reduced funding, lack of work, or any other event which requires the agency to save money. A “save money” furlough is typically a “non-emergency” furlough in that the agency has sufficient time to reduce spending and therefore give adequate notice of its specific furlough plan and how many furlough days will be required. An example of a “save money” furlough would be when, as a result of congressional budget decisions, an agency is required to make spending reductions over the course of a fiscal year.

Federal Employee Furlough Rights

For most employees, there are two basic categories of furloughs, each involving different procedures. A furlough of 30 calendar days or less is covered under adverse action procedures. A furlough of more than 30 calendar days is covered under reduction-in-force procedures.

Agencies must follow RIF procedures when furloughing employees for 31 or more continuous calendar days, or for 23 or more discontinuous work days. The complete RIF procedures must be followed, including a minimum 60 days specific written notice of the RIF furlough action.

An employee reached for release from the competitive level because of a RIF furlough has assignment rights to other positions on the same basis as an employee reached for release as a result of other RIF actions.

For a furlough of 30 calendar days or less, the law gives the following rights: at least 30 calendar days advance written notice by the agency stating the specific reasons for the proposed action; at least seven calendar days for the employee to answer orally and in writing to the proposal notice and to furnish documentary evidence in support of his or her answer; the right of the employee to be represented by an attorney or other representative; a written decision by the agency with the specific reasons for its action at the earliest time practicable; and the right to appeal the agency’s action to the Merit Systems Protection Board.

Even while on furlough, an individual is an employee of the government. Therefore, standards of ethical conduct, which include rules on outside employment, continue to apply to employees on furloughs. Additionally, there are statutes that prohibit certain outside activities.

Federal Benefits and Furloughs

For employees investing on a percentage of salary basis (although not on a dollar amount basis) the individual investment in the Thrift Savings Plan will go down during a pay period when on unpaid furlough, unless the employee changes the withholding. For Federal Employees Retirement System employees, the automatic 1 percent of salary employer contribution will be based on actual pay received, and matching contributions of up to another 4 percent of salary are similarly based on the actual amount the individual actually invests.

Financial hardship in-service withdrawals are allowed, although they come with restrictions such as a six-month suspension of further investments. If the furlough is for fewer than 31 days, a loan may be taken out, although a loan must be repaid on schedule or else a taxable distribution will be declared, with possible penalties in addition.

For health benefits, enrollment continues for no more than 365 days in a nonpay status. The nonpay status may be continuous or broken by periods of less than four consecutive months in a pay status. The government contribution continues while employees are in a nonpay status. The government also is responsible for advancing from salary the employee share as well. The employee can choose between paying the agency directly on a current basis or having the premiums accumulate and be withheld from his or her pay upon returning to duty.

For life insurance, coverage continues for 12 consecutive months in a nonpay status without cost to the employees or to the agency. The nonpay status may be continuous or it may be broken by a return to duty for periods of less than four consecutive months.

For annual and sick leave, when a full-time employee accumulates 80 hours of leave without pay, the amount of annual and sick leave that may be accrued in that pay period is reduced by the amount of leave the employee would normally earn during the pay period.

For retirement benefit computation purposes, an aggregate nonpay status of six months in any calendar year is creditable service. Coverage continues at no cost to the employees while in a nonpay status. When employees are in a nonpay status for only a portion of a pay period, their contributions are adjusted in proportion to their basic pay. Similarly, a furlough of less than six months does not affect the high-3 salary rate used in the computation.

Employees may be eligible for unemployment compensation, especially if they are on consecutive furlough days. State unemployment compensation requirements differ; many require a waiting period before benefits can begin.

Employees generally may take outside employment although they remain subject to ethical restrictions on conflict of interests.

Detailed policies on these and other issues are at www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance. Individual agencies issue specific policies on certain aspects, such as scheduling.

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