With sequestration going into effect, many people have questions about what sequestration is and how do federal furloughs work. The US Office of Personnel Management (OPM) recently published information explaining these concepts for federal employees. Included here are some highlights. For a link to the full information from the OPM see the end of this article.

Sequestration is an across-the-board reduction in Federal budgetary resources in all budget accounts that have not been exempted by statute. Under the Balanced Budget and Emergency Deficit Control Act of 1985, as amended by the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012, across-the-board reductions were scheduled to take effect on March 1, 2013, unless legislation is enacted that avoids such reductions. Sequestration will reduce each agency’s budgetary resources in non-exempt accounts for the remainder of the fiscal year (which runs through September 30, 2013).

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 types of federal furloughs, “administrative furloughs” and “shutdown furloughs”. The furloughs associated with sequestration are considered to be “administrative furloughs”.

Administrative Furloughs
An administrative furlough is a planned event by an agency that is designed to absorb reductions necessitated by downsizing, reduced funding, lack of work, or any other budget situation other than a lapse in appropriations. In contrast, where there is a lapse in appropriations, a “shutdown” furlough may occur. A shutdown furlough is necessary when an agency no longer has the funds necessary to operate and must shut down those activities that are not excepted under the Antideficiency Act. Many Federal employees may be familiar with these types of furloughs from instances in previous years in which the Government has faced a potential shutdown.

How Agencies Handle Furloughs
An agency has discretion to identify which employees will be furloughed and when to schedule furloughs based on its particular needs and mission. Factors an agency may consider when identifying employees that would be subject to administrative furlough include budget conditions, funding sources, mission priorities, and other factors to the extent required by law or applicable collective bargaining agreements.

An administrative furlough impacts each agency differently depending on the extent of the agency’s budget reduction. Agencies may need to schedule and implement furloughs in a manner so as to be able to absorb budget reductions over the course of the fiscal year. For example, an agency may furlough employees for one day per pay period for a finite period of time; designate a number of furlough hours that employees must take; designate specific dates as furlough days off; or allow employees to select their own furlough time off.

How Furloughs Affect Employees
Employees who were scheduled to work on March 1, 2013, still reported for work. Under sequestration, agencies still have funds available after March 1, but the overall funding for the remainder of the fiscal year is reduced. This means that agencies will not be executing any immediate personnel actions, such as furloughs, on March 1. If furloughs or other personnel actions prove to be necessary, agencies will provide affected employees the requisite advance notice.

Each agency determines the method and timing of notifying employees of whether they are affected by an administrative furlough, subject to applicable laws, regulations and collective bargaining agreements. Different notification requirements apply, depending on the length of the furlough, and are established by law. As a general matter, employees would be provided at least 30 days notification for an administrative furlough scheduled for 22 workdays or less, and at least 60 days notification for an administrative furlough scheduled for more than 22 workdays.

Employees who are furloughed are not separated from Federal service. They are placed in a temporary nonduty, nonpay status. Each agency will determine the timing of when employees take administrative furlough days. For employees represented by labor unions, the timing of furlough days is subject to collective bargaining. Because furloughed employees are not separated from Federal service, they are not entitled to severance pay.

It is possible that furloughed employees may become eligible for unemployment compensation. State unemployment compensation requirements differ. Some States require a 1-week waiting period before an individual qualifies for payments. In general, the law of the State in which an employee’s last official duty station in Federal civilian service was located will be the State law that determines eligibility for unemployment insurance benefits.

For more information on the sequester and furloughs from the US Office of Personnel Management see Supplemental Guidance for Sequestration and Administrative Furloughs (As of January 11, 2013) available at the US Office of Personnel Management (omp.gov) website.