Fun with Furloughs

Last week I got a surprise email from my boss.  It was a very unpersonalized forward from his boss, which was an unpersonalized email from our corporate headquarters.  Both of them forwarded the email with a simple “FYI” in the body of their email.  Ironically, the corporate email said it was not meant to be forwarded, and should be communicated “sensitively.”  So much for that…

I wish I could just post a snapshot of it here, but that would violate confidentiality agreements.  Here’s the gist:

Business is traditionally slow during the Christmas holiday, and money is tight.  So all non-critical personnel are required to take unpaid leave or vacation from 12/23 – 1/3. They will be paid during the official corporate holidays (12/24, 12/25, 1/1) but not the other days, unless they choose to use up accrued vacation days.

My response: “Sweet!  Now I can take some unpaid days off, then stack on some vacation days and I could easily take a full month off!”

Apparently I was the only one with such a positive response.

The office’s reaction was equally as unvaried as it was comical.  People were pissed.  Those with vacation days were upset that they’d need to use these days, when they would prefer to save them for the new year.  Those without vacation days were in a panic with how they would pay for Christmas presents, and quickly interrogating management about whether they could go into “vacation debt” by using days they had not yet earned, meaning that it would be halfway through 2014 before they were back in the black.

Incidentally, my most successful present to the kids was Monopoly Jr, a game that sells for $27 online, but I got off Craigslist for $5 in near-mint condition.  

Anyways, back to the email.  It’s amazing how having savings and perspective can keep someone rational and useful. While everyone else was irrational and borderline incoherent with their anger and frustration over the short-notice situation (and, admittedly, it was extremely short notice and poorly rolled out to our organization), I was able to keep calm.  We had a staff meeting shortly after the email came out, and there were 30 frustrated engineers weeping and gnashing their teeth about the situation.  Management had no answers, and this brought on more wailing.  It was as if terrorists were on the floor below us, and our leaders had no answer for them.

Finally, I stepped in.  (And, by they way, I’ve shied away from any sort of leadership at this job for nealry 3 years now so I didn’t do this lightly).  I silented my peers, took a deep breath, and calmly explained the list of questions we all had:  Can we split vacation days and unpaid days? Can we use “future” vacation days?  If our project is at a critical point in the schedule, can we get an exception to work and, if not, how will this be communicated to our paying customers? In general, how do we communicate this shutdown to our customers, who might view this as a problem for future reliability (and therefore effect future business awards)… And so on.

After the meeting, my boss’s boss came up to me and thanked me for calming everyone down and rationally listing the questions of my peers.  A few of my peers, the ones who had calmed down anyways, stopped by and thanked me for being the only one that made any sense.  They asked if I could send out the list of questions in email to make sure it was all documented and followed up on, which I did.

I never claim to be smarter or a better leader than the guys in my office.  I’m probably wiser than some, and certainly less so than others.  But that didn’t matter in the face of this change and chaos – all that mattered was that I didn’t need the money and had no concerns about the implications of what this furlough meant (where as others were/are worried that this is a preview of future layoffs).  I’ve said it before and I’ll say it again, the rewards of financial independence don’t begin when you can officially quit your job, they start as soon as you have the financial solvency and can “afford” to act rationally and logically in all situations.

It Doesn’t End There

But the story doesn’t end there. I waited about 2 weeks to figure out my holiday schedule, and entered our HR tool to fill out my vacation days.  We have a new rule that we can’t carry more than 100 hours of vacation over to the new year, and I had 124 hours accrued.  So Of the 7 furlough days, I decided to take 4 vacation days and 3 unpaid days to get me back down to 100 hours.  I filled this into the tool and submitted it.

A few hours later, my request was rejected by HR.  Apparently because I’m an exempt (salaried) employee, FLSA ruled require that I must be paid for the entire week, or none of the week.  So I then requested that I roll over more vacation days above 100 hours and just take unpaid days during the furlough.  That was also rejected.  Perplexed, I went to see my site manager.

I explained my situation, and told him I’d rather not force vacation days when I had nothing fun planned due to the short notice.  I’d be happy to take unpaid days, but it seemed that wasn’t an option for me. He told me flatly that I should just take my vacation days, and I explained that I would take the minimum I needed too, but it seemed the only way I could meet the silly HR requirements was to use 7 days of vacation and I didn’t want to do that since I’d rather save what I could for next year when the weather warmed up and I could do something fun with my family.

He couldn’t really deny my logic. Under short notice, I was told I had to take time off.  Fine, but to say I have to use my “vacation” days is not fine, since that’s supposed to be used with our own discretion how and when we want to.  To force unpaid days is reasonable, to force vacation days is not (to me, anyways).  Finally, he relented.  He called HR, but they wouldn’t be flexible with us.

When he hung up, he sighed. I asked him, “Surely I’m not the only one in this situation, so what’s everyone else doing?”  He replied, “Actually, you’re the only one trying to take unpaid days.”

30 people, almost all with a 6-figure salary, and I was the only one wanting to take unpaid days so I could have more vacation days later? I guess it shouldn’t surprise me anymore, but it still blew me away.

Anyways, I have a good relationship with his manager, and he was happy to help.  He told me to take all the days as vacation, but since I didn’t actually want to take them, he would give me a few “comp” days under the table to make up the 3 days I was wanting to take as unpaid.  Confused, I questioned whether that would mean I’d be paid for the days I wanted to take unpaid, but I’d still reserve the paid vacation days I wanted to keep.  He confirmed my assumptions, and smiled.  I guess you can have your cake and eat it too.

The funny thing to me is that I wasn’t trying to game the system. I was just fighting for what I thought was right, and something that seemed resonable for me.  It was a conversation I wouldn’t have had the courage to bring up had I not already achieved a comfortable financial position due to the fear of any negative repurcussions.  Instead, because I came into the discussion in a strong position, I was rewarded once again.

As I said above, financial independence (or even substantial savings) reward you long before you have the nest egg to quit.

38 Responses to Fun with Furloughs

  1. Funny story! I’m glad it worked out in the end, and it’s great to see some early benefits from having financial security, F-U money, etc. I like to think that I see some of the same benefits (more able to focus on work that matters, able to say ‘no’ when it’s appropriate, etc.), though rarely do I get an example as stark as the one you provided. Maybe 2014 is the year though. 😉

  2. J. Money says:

    Good for you on standing up and being the “voice” of your peers. It’s frustrating when there’s no one there to either lead or give answers, so I’m sure they appreciated it even more than the few told you.

    Reminds me of a time I worked at the airlines over at Newark Airport. I was about to go home after working a 12 hour shift at 10pm (I was a ticket agent) and all of a sudden I see this heard of people rushing to the counter in a pretty furious state. I turn around to ask my manager what was going on, and he quickly scurried into the back office and said “he can’t deal with this” leaving me to fend for myself (again, after my shift, mind you). It was like a horrible movie scene – 100+ people stranded at the airport because their flight was cancelled after waiting on the tarmac for a good 3 hours trying to leave. So not only were they pissed at that part, but now it turns out their stuck while a huge snow storm hits!

    To make a long story short, I had to calm them all down by jumping onto the counter and screaming at the top of my lungs that I’m here to help but I needed everyone to hit pause for a bit until I could figure out the situation. Seconds later they all hushed, but it could have also been because the security guards came up to help keep them in line too :)

    I was there for 8 more hours, having to spend the night there, and eventually my manager and others came out to help. It was a pretty incredible time (then, I’d call it horrible, but now a fun story!) but juts goes to show that *someone* at all times needs to be in charge however it plays out.

    Thanks for the interesting read this morning – and congrats on your win! :)

  3. Totally understand your situation. When you don’t need the money, taking unpaid vacation is entirely normal. Whereas other folks don’t want to lose any possibility of income. Thus, they want to take those paid vacation days. Which I understand as well. But looks like you got the upper hand this time as you are in a position of power which I’d admit would feel great as that’s what financial independence does to people. It makes them more confident of their decisions and they are ok to live life the way they want to live it. Totally envious of you… Until I get there myself. :)

  4. KR says:

    Three weeks before Christmas my company laid 16 people off, me included. I felt hurt, but slightly jubilant, because I have a standing invitation to visit friends in Thailand, and January is the best time to go, and I’ve always wanted to go for more than standard vacation time allows. I feel a little worried because I was saving a lot of money with that job and don’t want to slow down on my retirement savings … But heck, I bought my ticket and I’m going to enjoy my time off. My work partner, on the other hand, kept saying she’s broke. You’re totally right, that what matters is savings, even if you’re not at the retirement threshold yet.

  5. Ken says:

    You should have sent out an email explaining the pitfalls of living paycheck to paycheck. It really blows my mind how anyone making 6 figures can be so careless with their finances. Wife and I make well under 6 figures and we have tons of cash in the bank and live well below our means. And we’re in Denver where the cost of living isn’t exactly low.

    • I wish we lived in a culture where an opinion like that could be shared openly like you suggested. Instead, I choose to share here, where the people reading it likely *want* to hear the message. Pushing these ideas, in my experience with my parents and siblings, has proven to be a bad idea. So instead I just live by example, and hope people will catch on.

  6. Brenden says:

    Great post. I like that the best present you gave was one that teaches money skills like cost/benefit analysis and debt.

    I am still just starting in my career but I would love some unpaid vacation days. I imagine it will be even more so as I become financially stronger. When I go on vacation the limiting factor is mostly time. Unpaid vacation would be a great help with that.

    I wonder if it would be the same situation in my place of employment with everyone taking vacation versus unpaid days. Seeing everyone else meltdown must have been kind of a validation that you are on the right path. Money is more than just a way to buy things. Enjoy your time off!

    • Well, Monopoly Jr. doesn’t really teach anything about cost benefit analysis and debt, unfortunately. It’s a VERY dumbed down version of monopoly… But still, it’s the first game that my 5 and 3 year old can play that’s not completely mind-numbing like Chutes and Ladders and Candyland. :)

      Interesting fact: Did you know that statistically it’s better to not buy Boardwalk and Park Place early in the game? I always though they were the best properties to own early, because the mortgage is so high. But it turns out that studies show that if you land on it the first couple times around the board, it’s better NOT to buy it. Maybe no one cares, but I thought it was an interesting study…

      • David W says:

        Makes sense that buying expensive property right away isn’t the greatest idea in Monopoly and the real world.

      • Brenden says:

        Orange and red are my go-to properties. I always thought Boardwalk and Park Place were a little overpriced and not landed on often enough. But everyone else I usually play with likes them so they are good for trading. They are high risk/high reward.

      • Ken says:

        Orange and red for me too, actually anything cheaper than red. Anything I can do to get a monopoly fastest.

  7. Jen says:

    I don’t think all of these people must be living paycheck to paycheck. Myself, I have enough savings to last me several years without a job, but I would be too extremely pissed if 1/3 of my monthly salary was taken in exchange for free days. I am on my way to FI and such loss of income now would be equivalent to several more months of work before retirement. It is same as blowing this money on a Vegas vacation or one year worth of cafeteria lunches. I think this kind of ordeal is much more upsetting to those aspiring to FI than to those who would spend the cash on Christmas presentts.

    • Multiple people mentioned paying for Christmas, so I wasn’t just stretching assumptions with my comment about that.

      But with that said, I understand completely what you’re saying. Back in 2003, when I was only a few years into my FI journey (unbeknownst to me, at the time), my company had an optional furlough. Many of my older co-workers cashed in on that, and I totally didn’t understand. My thought was: why would anyone choose to take unpaid time off work? That’s a lot of money!

      So obviously things have changed for me. Part of it is that I have a good stash of money, as you mentioned in your comment. But there’s also something more… My evolved perspective and priorities have me valuing time for myself and my family more than anything else. I think a lot of that came when I had my first kid.

      • Jen says:

        And I completely understand your position – I would live extra days off if I were already FI.
        Just curious – are you retiring anytime soon?

      • Jen –

        Yes, probably pretty soon. I have some things to figure out regarding insurance, because my numbers don’t add up the way I’ve seen some people talk about it in the “early retirement” circle online. Once I get that reconciled, I’ll be making more permanent plans. In the meantime, I’m also exploring working par time. I’m in the midst of a pretty big project at work, and I do kinda want to wrap that up for my own personal reasons. I’ll be writing about that more in the coming months.

  8. Slinky says:

    A company I previously worked for did this as well for about three years running, each time with very little notice, and we were required to use our vacation time up before taking unpaid time. As a more recent hire, I had little stockpiled vacation time and a lower accrual rate. SUCKED. I also would have gone unpaid and used my vacation time during a time my husband could have actually taken time off too. Instead, I had my vacation sucked dry (in weekly increments) every year and then had to carefully ration every day. Then the company basically got bought out and I quit (for many good reasons). However, my boss assured me that it was all “Perfectly normal and every company does that.”

    • Ken says:

      Man, that is a really crappy thing to do to employees, especially new ones. It basically meant almost no paid leave time during the year.

    • Slinky –

      Every company definitely does NOT do that. I’m surprised forcing the use of vacations is even legal, but maybe I’m just an ignorant optimist. Of course, some people would say all optimists are ignorant. :)

      To be honest, the only problem I had with the whole deal was that it was done with short notice, when the reason behind it was that “historically this is a slow time of year.” If it’s based on historical data, then it could have been announced months in advance.

  9. Laura says:

    Sounds like something my company would do. Or the opposite… A lot of the engineers I work with end up with so much vacation time by December and so much critical work to do that the company “buys” it back. Not me; I make the most out of mine throughout the year!

    But I can totally see people going nuts if they had to take a reduced paycheck. The short notice was pretty crappy by your company. I would have been pleased with the extra time off but yes, so many of the people (with the 6 figure salaries) live paycheck to paycheck.

    I was just talking to one of my coworkers about getting Lasik eye surgery and how I was able to use my Flexible Spending Account to pay for the surgery (around 5K spread over the year, tax and interest free) and he said he could never afford that. Yet he has a huge house with so much STUFF and kids that have everything. Priorities, I guess!

    Thanks for bringing up a very relevant topic!

  10. Dr. Doom says:

    Enjoyed the post. Reminded me of a situation I went through during the crash in 2008. I’d been working at a startup software company.

    As the market bombed, all of our sales leads dried up. The industry was panicked. My co-workers were panicked. Management was panicked. The pipeline was nearly dry and there was a sense of desperation in the air. No one could feasibly look for another job because no one was hiring. The entire country was frozen.

    At the time I had about 100K in a taxable account (150 or so pre-crash) and barely blinked. This is over 3 years of living expenses.

    So as we marched through the rest of 08 and a fairly bleak 09 (a year which also included a furlough along with other reduced benefits and indignities), I felt it was my duty to show up to work every day and just be optimistic. Brought bagels and chatted with folks about regular stuff. Because I was the only one who wasn’t scared out of his gourd, I felt like a superhero. My power was the ability to resist fear-induced paralysis. And the mystical source of this power?

    FI. It makes you feel like a champ, maybe _especially_ when faced with adversity. It gives you the strength to think clearly, to remain even-keeled, to be a better person, to help other folks out.

    The story has a happy ending. Just when the last of the company money dried up, a big software house which shall remain nameless bought us on the cheap.

  11. Fatchance says:

    I work in an extremely cyclical company. In 2009 we had 13 weeks of furloughs. That was tough, but not crippling as both my wife and I work. We just tightened our belts. Now, in a typical slow year we will have 1 week furlough per quarter. I also get 5 weeks of vacation. I take the furloughs unpaid and keep my 5 weeks of vacation. That is 9 weeks off a year. I LOVE IT! Like you though, when I put in for unpaid time with a bank of vacation days, I get pushback from HR. They normally think I made a mistake as apparently no one else does this.

    I find it interesting that a furlough or pay cut (during severe conditions) causes the amount of grief it does to people making $100K-250K+ per year. I, too, hear the stress, complaining, and phone slamming during these times. How do you make that much and still live on the edge check to check? I am greatful that my drive to FI has shifted my priorities and reduced my stress.

    Also…Need to pay for Christmas? If I am living check to check and the company announces a furlough, my family is getting <$100 of gifts combined and that includes the Christmas meal. I am not going to dump $1000 on Christmas to keep up appearances or expectations.
    Great article today. Keep up the good work. Write more :)

    • Amen, brother.

      Write more, you say? That’s actually a primary goal of 2014. Not just writing more, but actually publishing the things I write. I’d estimate only 10% of what I write ever gets published because I don’t like the way things come out. I’m hoping to fix that.

  12. Harlin says:

    Great site and blog. Looks like you took a similar path as I did. I came from Atlanta to COS and I love it. This article hits home (and the office too). You did the right thing. I only had this happen when I was a contractor. I work for a great company now and am very fortunate (but no telling how long it will last–gotta be prepared for the worst). Looking forward to reading more.

  13. Pete Cash says:

    Great story. It’s a shame when you’ve been working so hard for a company and yet they try to scam their loyal employees by squeezing their leave. Hope you and your family had a wonder Christmas together! :) Looking forward to reading your blog more over the coming year.

  14. No Name Guy says:

    BNL: Glad to hear you’re considering P/T. I’m currently in my 2nd stint of P/T with the employer (both times by choice – current stretch has been 1 1/2 years). I work a 70%-of-full-time schedule (7 days in 2 weeks). Every Friday is off and alternating Thursday’s are off. It allows me plenty of time for volunteer work plus non-stop mini vacations / hiking trips / etc.

    Paradoxically, this schedule saved my backside from being laid off late in 2013. I’m the junior person in my function and company division (at 15+ years in the business, it’s a very senior group and the latest company organization is such that cross division bumping of more junior folks in the other division(s) is a no-go). Anyways, that would nominally make me first to be cut if anything in our division slowed down. Just such a slow down happened on another program in the division and a more senior person was made surplus. Normally he would have come over and bumped me out the door, but since my P/T schedule actually fit the available budget, my manager would have had to declare a surplus since he didn’t have budget for a F/T head. Bottom line, the other guy is getting laid off.

    As it turns out the other guy was ok taking the layoff – he had particular family circumstances where he probably needed to be at home anyways and he was close to retiring as well, so taking the severance will tide him over without too much belt tightening until the pension kicked in.

    Even if I had been nailed with the layoff, it wouldn’t be a big deal. As I’m most of the way to FI / ER, passive income would supply me with most of my needs. In the worst case of not being able to find comparable employment, my plan would be to roll the 401k into an IRA or two, 72(t) / SEPP some of it, then work part time at minimum wage (heck, anyone can get a job at Large Coffee Chain or similar). Knowing that I have a backstop means I wasn’t, and am not currently worried, about getting nailed by a layoff. It’s not quite FU money….but close enough to not sweat a layoff.

    Note: despite working P/T, I’m still saving over 50% of my after tax pay.

    • That’s a great story, thanks for sharing it. I have 2 questions, if you don’t mind answering them.

      1. How did you go about proposing the switch to P/T?
      2. Was it a salary position, and did it remain one? In my case, I’m salary and I’m not sure if I would have to switch to non-salary (which would be fine for me, but dealing with my HR has been a pain in the past)

      • No Name Guy says:

        I’m a unionized engineer at a major Seattle aerospace company. So, yes, it’s salaried in the sense that we’re exempt, but everything is governed by the contract. P/T is paid on a pro-rata basis – I work 70%, so am paid 70% of my nominal F/T salary, earn sick / vacation time at 70%, etc. I’m still classified the same – engineer in the union, doing the exact same job, same skill classification, same pay code, etc, so in that respect, things aren’t any different except my work schedule.

        Being the mega corporation that it is, there is a policy and procedure for everything. I merely followed the policy and asked my manager to be put on P/T both times. Going to P/T is “at the discretion / if it makes business sense” to the company. So, they could have said no. They found it was in the interest of the company to do so, so approved.

        Now, as far as the timing of these requests – they were both when it was in my AND my managers / company interest (timing was everything). The first time, it was after one phase of a program was winding down and before the next phase kicked off. There was going to be a lean budget time anyways, so a win / win was to do the P/T. When the next phase came through, I asked to go back to F/T to support the business needs as the program ramped up (thereby showing my good faith to support on the up swing, hence to make it easier to request in the future). It was a lot easier than laying me off or transferring me, then trying to get me or someone else back once the ramp up came through.

        This last time going back to P/T, it was the same deal, only it was as another program I was supporting on a part time basis was winding down with no sure near term program to ramp back up (but several possibles). Again, it was a win / win – I wanted more time for outside interests, and it was convenient for boss to not have to come up with the additional work for me. If things pick up, I’ll go back to F/T and speed myself to FI / ER that much faster going from 70% pay (and saving 1/2 of that after tax) to 100% pay (and probably saving ~65-70% of that after tax).

        Several years ago, I took a 6 month sabbatical so the idea of more time off NOW to pursue outside interests has been in my head for quite some time. I’m willing to delay FI / ER a bit for the time off now. With our year end shut down (we get few holidays during the year, so they’re clustered between Christmas and New Year), the P/T schedule and a few days of vacation usage, I put together an 18 day off time at the end of the year and into this year (today is the first day back to work).

      • Thanks No Name Guy.

        I’m in almost the exact same position. I’m between projects and underutilized, my company has the same official HR policy about P/T being manager’s discretion, and the company is looking to reduce costs in my organization where possible. We also theoretically have a major increase in workload coming in March/April, so they don’t want to get rid of anyone. It seems like the timing might be just right.

        I also took an extended time off during the holidays – 17 days in my case. It was wonderful and refreshing, and made it all the harder to return yesterday (although I only worked for 3 hours).

        Now I have a few personal and financial details to work out over the next month, then I’ll be ready to decide whether ER or PT is right for me at the moment.

  15. No Name Guy says:

    BNL: In re ” then I’ll be ready to decide whether ER or PT is right for me at the moment.”

    I’d suggest the two aren’t mutually exclusive. Like any thing in life, it’s a trade along a continuum. P/T now merely slides ER / FI to the right a bit.

    My GF makes the same argument in your quote to me: She more or less says “Well, if you want ER / FI so bad, why aren’t you working F/T in lieu of the P/T?” My response is that if I was F/T, I’d be FI in X years, but those years would drive me insane. At P/T, I’ll be FI in X+30% years, but those years will be pretty easy. And given how close to FI that I am, that extra 30% time isn’t all that long, unlike if I was just starting the journey to FI. I’m OK with that trade.

    • Yep, I understand. In my case, it’s a little different because I’m pretty sure I’m already FI and could retire anytime. However, I still have two open questions:

      1. Insurance. I still have some work to do to figure out what that will cost, because the numbers I see quoted online are much higher than what I’ve seen from guys like MMM, despite living just 100 miles south of him and getting quotes from the same website.

      2. I have a vacant rental property for sale, worth close to $200K. I need to get that sold. Assuming I get what I’m told it’s worth, then by my calculations there is no P/T vs. ER trade-off to consider (financially, anyways). If I get significantly less for it, then that’s when the trade-off comes into play.

      So depending on how those two things work out, I’d choose P/T if I’m almost there, but I’d choose ER if I am there. What I don’t want to do is jump through hoops to get P/T, then bail out a month later. The people that would help make P/T possible are my friends, so I don’t want to put burden on them if it’s unnecessary.

      • Ken says:

        Who is MMM? Now that I’m not swamped with work I’d like to meetup with one of the finance guys for lunch/coffee but I’m up in Denver. Please shoot me an email so we can chat.

      • Ken –
        MMM Mr. Money Mustache. He’s up in Longmont. You can try contacting him through his contact page.

        And if you have anything you want to chat about with me, you can feel free to hit me up on my contact page. It will send me an email and I’m usually pretty quick to respond and always enjoy a good conversation.

      • Ken says:

        Thanks, will be in touch.

      • No Name Guy says:

        Certainly don’t leave any ill will behind – not necessarily because you would ever HAVE to go back, but just because it’s the right thing to do (which you’re doing – I salute you, Sir, for that).

        Hopefully your house sale goes through quick and full expected price. Here in the Seattle area, for places in close to the city core, it’s been a hot market the last year, with decent houses going multiple bid and prices going up (too, IMO) strongly YoY.

  16. Sounds like some major bull-honkey to me! Best of luck getting your F-U money lined up so you can leave the insane asylum for the insane to run.

  17. […] Fun with Furloughs – A good point on the very real benefits of FI even before you quit your day job. […]

  18. G42 says:

    My company had a mandatory furlough last year for the holidays (7 unpaid days plus 3 paid holidays) – announced with about six weeks notice. Everyone who’s been at the company less than four years or so and/or below a senior manager level has 10 paid vacation days, so this disproportionately affected the youngest and least senior folks – usually with the lowest paychecks. Most folks that I talked to were furious – not so much about the money – but by what felt like a lack of consideration and respect by the company. The purported reason for the furlough was that too many senior folks were not taking their vacation, so the liability was riding on the books… So lack of upper management discipline adversely affected those least able to afford it.

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