To cut personnel costs and avoid layoffs, many employers are considering or have implemented “furloughs” (i.e., reducing normal hours worked without paying employees for such reduction). This potential cost-cutting measure, however, has various legal, financial and operational factors that employers should consider. Legal considerations include whether the action or effects of it must be negotiated and agreed to by respective unions before implemented, or whether a federal Fair Labor Standards Act exempt employee must still be paid his or her entire weekly salary during the weeks of furloughs. Further, financial and operational considerations include whether furloughed employees retain city-provided benefits or are otherwise entitled to unemployment insurance benefits and whether the productivity and efficiency of employees will decline as a result of the reduced work hours. Before implementing furloughs, employers should review policies, benefit plans, labor contracts and individual employment agreements, along with potential impacts on finances and operations, and discuss the potential of furloughs with employees and unions.