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What to know about looking for a new job while you're furloughed

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Of the 20.5 million Americans who lost their jobs in April, roughly 4 in 5 consider their layoff temporary and believe they'll be called back to work within six months.

While some furloughed workers are getting those calls as businesses reopen across the country, others who have yet to hear any news may be wondering how long their furlough period will last. 

If you become furloughed, you remain an employee with the company but take an unpaid leave of absence. You may continue to receive some employer-sponsored benefits, such as health insurance, for a set period of time, and you're eligible to receive unemployment benefits.

CNBC Make It spoke with workplace experts about why you might want to consider looking for a new job while on furlough during the pandemic, and what kinds of legal considerations to keep in mind.

Why does it make sense to find a new job while you're furloughed?

Workers who may need to earn more than what they're receiving through unemployment benefits, are concerned about losing their health-care coverage during a global pandemic or think they may not have a job to return to may consider looking for another job while on furlough.

After all, to minimize financial stress, the best time to find a new job is when you already have one.

"A furlough is not a binding contract that the employer who you worked for will rehire you. It's an expression of intent to rehire you at some point with no timeline," says Ian Siegel, co-founder and CEO of ZipRecruiter, the online jobs marketplace. "You get the benefit of continued health insurance at many companies, and maybe some other rare small perks. However, it behooves you to examine every opportunity available to in the market when you're furloughed."

Additionally, depending on where you live, your state may require that you prove you're actively searching for work when you certify your weekly unemployment benefits, says Michele Evermore, senior policy analyst with the National Employment Law Project. Some states, such as New York and California, have waived that requirement during the pandemic.

What kind of new job can you look for while you're furloughed?

In most cases, you'll be free to look for any kind of new job while you're on furlough, whether it's part-time, full-time, on payroll or on contract. However, your employer could have restrictions on the type of new work you look for, says David Barron, a labor and employment attorney with Cozen O'Connor.

For example, your employer may restrict you from searching for work with a direct competitor. Rules may be more strict if your employer is still paying for your health insurance and other company-provided benefits, he adds.

That said, "if you don't have the ability to work for that person, most employers understand that you may have to go find work," Barron says. In any case, it's best to contact your HR department if you plan to find another job to make sure you're not violating any terms of your furlough.

What happens to your unemployment benefits?

If you take another job while on furlough, you'll have to report your weekly earnings when you certify your unemployment benefits. Failure to do so is classified as unemployment insurance fraud. Consequences vary by state and can include having to pay back benefits plus interest, penalty fees, ineligibility for future benefits and criminal prosecution.

Many states allow you to earn up to a certain percentage of your benefit amount through other work, such as a part-time job, before your payment is reduced. The number of hours or days you work could lower your benefit amount, or it could make you ineligible entirely.

Workers currently earning partial unemployment are also eligible to receive the weekly $600 federal benefit laid out in the coronavirus relief bill.

It's possible you can earn money from a new part-time job and still collect partial unemployment from your furloughed job, plus the $600 federal boost, to bring in more each week than you did with your previous job.

Are you allowed to quit a job when you're on furlough?

Yes, being on furlough doesn't limit your ability to quit the job altogether in order to take a new permanent job elsewhere. Of course, voluntarily quitting your former job will make you ineligible to receive unemployment benefits for that role.

And remember to consider what will happen to your health-care coverage when you move employers, especially given the current health crisis, Barron adds. Some companies cover new-employee benefits from day one, while others do so after a set waiting period of up to 90 days. If the latter is an issue, you may look into short-term coverage through COBRA, the marketplace or another alternative.

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