What happens to your unemployment claim when you're furloughed

A furlough is a temporary layoff—your employer tells you to stop working, but you remain employed and may return when business picks up. From an unemployment insurance perspective, a furlough looks like a layoff on day one. You can file a claim when ready, and most states will process it the same way they would for a permanent separation.

The key difference emerges later: if your employer recalls you and you refuse to return, you may lose benefits for that refusal. If you return and then get laid off again, you file a new claim. But during the furlough itself—the waiting period before recall—you're treated as unemployed and can receive weekly benefits.

Furloughs became widespread during the 2020 pandemic shutdowns, and the rules that applied then still explore now. Your state's unemployment office doesn't distinguish between a furlough and a layoff when you first file. What matters is whether you're working and earning wages in the week you're claiming benefits.

Key Takeaways

  • You can file for unemployment benefits the week your furlough begins, even though you remain technically employed.
  • Each week you claim, you must report whether you've worked and how much you earned—furloughed employees report zero earnings during the furlough period.
  • If your employer recalls you and you refuse to return without good cause, you may lose benefits for that week and beyond.
  • Your weekly benefit amount is based on your earnings history before the furlough, not on your employer's promise to rehire you.
  • Some states have specific rules about how long a furlough can last before it's treated as a permanent separation; check your state's guidelines.

How to file when you're furloughed

File your claim through your state's unemployment insurance website or by phone. You'll need your Social Security number, driver's license or state ID, and information about your most recent employer—name, address, phone number, and the date the furlough began. Most states let you file online in 15 to 20 minutes.

When the form asks why you're not working, select "furlough" or "temporary layoff" if that option appears. If it doesn't, select "layoff" or "lack of work." Be honest about the reason: if you say you quit when you were actually furloughed, the state may investigate and deny your claim.

File as soon as the furlough begins. There's no advantage to waiting, and some states have a one-week waiting period before benefits start. Filing early means that waiting period ends sooner, and your first check arrives faster.

Weekly reporting and what to tell the state

After you file, your state will send you instructions for weekly reporting. Every week you claim benefits, you must report whether you worked and how much you earned. During a furlough, you report zero hours and zero earnings.

If your employer calls you back to work partway through the week—say, Wednesday—you report the hours and wages you earned Wednesday through Sunday. Your benefit payment is reduced by a portion of those earnings. The exact reduction depends on your state's formula, but most states allow you to earn a small amount (often $50 to $100 per week) before benefits are reduced dollar-for-dollar.

Some employers ask furloughed workers to do unpaid work—checking email, attending training calls, or preparing for return. Do not report this as work. You report only paid work. If your employer is paying you anything during the furlough—even a small stipend—you must report it.

When your employer recalls you

If your employer contacts you and says you can return to work, you must decide whether to go back. If you return, you stop claiming benefits that week. If you refuse to return without good cause, you may lose benefits.

"Good cause" varies by state, but it typically means circumstances beyond your control—you have no childcare, you're medically unable to work, or the job conditions have changed materially (for example, the employer now requires you to work in-person during a health emergency and you have a documented medical condition that makes that unsafe). straightforward preferring not to return is not good cause.

If you refuse recall and lose benefits, you can appeal the decision. The appeal process involves a hearing where you explain your reason for refusing. If the state agrees you had good cause, benefits are restored. If not, you must wait until you're laid off again or find new work to restart your claim.

Distinguishing a furlough from a permanent layoff

A furlough is supposed to be temporary, but some employers use the term loosely. If your employer says "furlough" but has no plan to recall anyone, or if months pass with no communication about return, the state may reclassify it as a permanent separation. This doesn't hurt your benefits—it just means you're no longer waiting for a recall that may never come.

Some states have rules about how long a furlough can last. In New York, for example, a furlough lasting more than 13 weeks is treated as a permanent layoff. In other states, there's no fixed limit. If you're uncertain whether your furlough will be reclassified, contact your state's unemployment office and ask. They can tell you the rule in your state and whether your situation meets it.

If your employer eventually recalls you after a long furlough and you've been receiving benefits the whole time, you don't have to repay those benefits. The state has already determined you were unemployed and may have access to to them.

Tax withholding and what you owe later

Unemployment benefits are taxable income. When you receive your weekly payment, the state does not automatically withhold federal income tax. You can request withholding when you file your claim, or you can pay the tax when you file your annual tax return.

If you don't withhold and you receive a large amount in benefits over several months, you may owe a significant tax bill in April. Many people in this situation choose to have 10% withheld from each weekly payment, which usually covers the federal tax owed. Some states also withhold state income tax if you request it.

Keep records of all benefits you receive. Your state will send you a Form 1099-G in January showing the total benefits paid in the previous year. Use this form when you file your taxes.

Special rules for pandemic-related furloughs

During 2020 and 2021, the federal government added extra money to state unemployment benefits through programs like the Pandemic Unemployment information (PUA) and the Federal Pandemic Unemployment Compensation (FPUC). These programs have ended, and the extra payments are no longer available.

If you were furloughed during the pandemic and received benefits, those payments are final. Some states later discovered overpayments—cases where people received more than they were may have access to to—and attempted to recover the money. If your state contacts you about an overpayment from 2020 or 2021, you have the right to appeal. Many states have waived recovery efforts for pandemic-era overpayments, but the rules vary. Contact your state's unemployment office if you receive a notice.

What to do if your claim is denied

Your state may deny your claim if it determines you were not laid off—for example, if your employer says you quit. If this happens, you'll receive a written notice explaining the reason. You have a limited time (usually 10 to 30 days, depending on your state) to file an appeal.

To appeal, contact your state's unemployment office and request a hearing. You'll have a chance to explain your side of the story, and your employer will have a chance to explain theirs. Bring any documents that support your account—emails from your employer about the furlough, text messages, pay stubs showing the furlough period, or anything else that proves you didn't quit.

If you win the appeal, benefits are paid retroactively to the week you filed. If you lose, you can appeal again to a higher level, though this is less common and the bar is higher.

Frequently Asked Questions

Can I file for unemployment if my employer says I'll be recalled in two weeks?

Yes. File when ready. You don't have to wait for the recall to happen. If you're recalled and return to work, you straightforward stop claiming benefits that week. If the recall doesn't happen, you continue to claim.

What if I get a part-time job while furloughed?

Report the hours and wages from the part-time job on your weekly claim. Your unemployment benefit will be reduced based on what you earn, but you may still receive a partial benefit. The exact amount depends on your state's formula and how much you earn.

Do I have to accept my employer's recall?

You must accept recall or have good cause to refuse. Good cause means circumstances beyond your control that make returning unsafe or impossible. Wanting to stay on unemployment is not good cause. If you refuse without good cause, you lose benefits.

Will I have to repay my unemployment benefits if I'm recalled?

No. If you were furloughed and received benefits during that time, those benefits are yours to keep. You don't repay them when you return to work.

How long can a furlough last before it becomes a permanent layoff?

This varies by state. Some states have no fixed limit; others treat furloughs lasting more than 13 weeks as permanent separations. Check your state's unemployment office website or call to find out the rule in your state.