The world is currently cautiously emerging from the global pandemic caused by the novel coronavirus, COVID-19. This virus was first noticed in China towards the end of 2019 when medical specialists noticed a cluster of patients with pneumonia-like symptoms. It did not take long before researchers and scientists attributed the cause of this pneumonia to a zoonosis of the coronavirus family. However, this virus has never been seen before; hence, its name, the novel coronavirus.
It did not take long for experts to realize that this virus is extremely contagious and causes symptoms ranging from mild to fatal. Thus, the only way to control its spread is through social distancing or social isolation measures. It spread rapidly around the world to the point where over 50% of the world’s population was under some form of lockdown or stay-at-home order. At the peak of its rampant spread across the USA, more than 90% of the US population was ordered to stay at home.
Furloughed or laid off due to COVID-19: The statistics
Current statistics show that, in the USA, over 30 million workers, or 23% of the workforce, have filed for unemployment since the last week in March 2020. Incidentally, this date correlates with the start of the US lockdown. All unnecessary businesses were forced to close, and employees were either laid off or furloughed.
The economic shutdown, as a consequence of COVID-19, has hit the world’s population hard. The US economy has seen a reduction of 4.8% in the first quarter of 2020. Consumer expenditures that normally comprise 67% of the US total GDP dropped by 7.6% in the first quarter. This is attributed to the fact that all non-essential stores were closed.
Paul Ashworth, the chief U.S. economist at Capital Economics, stated that “the upshot is this was already an economic catastrophe within two weeks of the lockdowns going into effect.” He also noted that the second quarter of 2020 would be far worse than the first quarter.
On the one hand, it is understandable that jobs in the hospitality industry, as well as small businesses, will be lost; however, jobs have been shed across all sectors of the US economy, including federal and state government jobs, healthcare positions, as well as technical jobs.
Furloughed or laid off: What’s the difference?
The lawyers at ejrosenlaw.com rightly note that there is a fundamental difference between being furloughed and laid off.
In essence, these terms are both considered cost-saving measures that companies can use in a time of crisis, such as the current pandemic. It is also worth noting that, even though these terms are often used interchangeably, they are not the same thing. Therefore, let’s look at the definition of each term individually.
Furlough
Wikipedia.com describes a furlough is a “temporary leave of employees due to special needs of a company or employer, which may be due to economic conditions of a specific employer or in society as a whole.” There is no specific time frame attached to this temporary leave. And, it’s essential to note that this leave form is unpaid. Ergo, the employer cannot pay wages.
Layoff
The term “layoff” translates into a temporary loss of employment by the employer due to the lack of work available. It’s vital to note that being laid off is “not caused by any fault of the employees but by reasons such as lack of work, cash, or material.” Being permanently laid off is known as being made redundant.
Furloughed or laid off: What does the employment law say?
Because, the COVID-19 pandemic is a unique period in the world’s history, the federal government has provided for employees in the passing of the CARES (The Coronavirus Aid, Relief, and Economic Security) Act. These are temporary regulations designed to address employer and employee challenges during the COVID-19 pandemic. Additionally, it aims to provide fast and direct economic assistance for American workers and families, small businesses, and preserves jobs for American industries.
The next act passed is the Families First Coronavirus Response Act (FFCFRA). Investopedia.com notes that this act “addresses the impact of COVID-19 on the domestic front by providing expanded nutrition assistance, paid sick leave, enhanced unemployment insurance coverage, free coronavirus testing, and increased federal Medicaid funding.”
In other words, it is designed to provide nutrition for Americans who do not have enough food to eat. Ergo, it addresses the food security requirement. Secondly, employees are mandated to cover COVID-19-related sick leave and family medical leave. It also addresses the individual taxation issue by providing tax credits for employees to cover the cost of the COVID-19-related sick leave and family medical leave. Finally, it covers extended unemployment benefits and supplementary funding to all of the USA states.
Final words
The good news is that the world is cautiously emerging from the side effects of the COVID-19 pandemic. Countries like the USA, UK, Italy, Spain, China, New Zealand, and Australia are starting to open up again; thereby, signaling to the rest of the world that the new normal is navigable.
