Is a work furlough a sufficient violation of an employment contract to be considered a constructive termination?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 16, 2021

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Whether a work furlough is a violation of an employment contract probably depends on the contents of the individual contract. However, generally speaking, it may be possible to show  a breach of the employment contract by looking at the salary figure. If the contract explicitly references or guarantees a salary figure, that might be the best and easiest case for the employee to show that the employment contract has been breached by the employer. Salary is a material term of any employment contract; if the furlough results in the employee earning less than the contract calls for, that would most likely be considered an important, or what a court would call “material” breach of the contract, and almost any appreciable loss would probably be deemed a material breach. While again, there’s no simple, black line answer—e.g. it’s not the case that “two days furlough is ok, but three days is too long”—since salary is probably THE key employment term, there’s a good chance that a furlough resulting in the loss of a significant amount of salary would be considered a material breach. 

In a situation where an employee has been placed on a work furlough, one common question is whether the employee is still obligated under the contract, or whether the employee has sufficient cause to terminate the contract without being liable to the employer for breaching the employment contract. Contracts are enforceable against both parties. In the case of employment contracts, not just against the employee, but also against the employer. If a party breaches a contract, the other party will have recourse—generally, a lawsuit or legal action for damages. If a breach is sufficiently material (important) then one party’s breach may give the other grounds to terminate the contract without penalty. Note that not every breach will provide grounds for termination, and there is no “bright line” or black-and-white test for when one does. Note that even if a breach by the employer through a furlough were not significant enough (material enough) to justify the employee terminating the agreement without penalty, if the employee left and had to pay a penalty, he or she could presumably offset the employer’s breach—i.e. the money owed him or her owing to the furlough—against any penalties owed to the employer.

If you are part of a union your contract may have been renegotiated in order to provide for work furloughs for employees, or, your contract provided for furloughs to begin with. The same is true with public employees. Since there are no hard-and-fast rules for this situation, it would be important to review the contract and situation with an experienced employment law attorney, who can help evaluate employee and employer rights and responsibilities under the contract.

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