Hi Hope, I'm no expert in this but I unfortunately had to furlough and lay off people this past spring.  I would advise that you consult an attorney on how to mitigate risks.  Here are some things I did: we invited people to volunteer for furlough, we evaluated all our people on performance-based, skill-based criteria and made our decisions using that spreadsheet combined with our volunteer list as a guide for selecting people.  I wrote out a letter explaining reason for furlough and provided supporting documents outlining impact to benefits and some information on how to apply for unemployment.  We asked everyone on furlough to call me at regular intervals to keep in touch and indicate ongoing availability to work.  For those we eventually had to lay off, we paid out a severance in exchange for them signing a document basically stating they didn't have any reasons to sue us.  We also paid out unused vacation.  We had conversations with employees in person if possible, if not in person, then over the phone.