Despite the fact that the unemployment rate edged down to 3.5% in July 2022, marking a return to pre-pandemic levels, a number of major companies, including Peloton, Tesla, 7-Eleven and Shopify, have announced sweeping layoffs in recent months, in part due to labor costs increasing.
There’s nothing unusual about getting laid off—in fact, 40% of Americans have been laid off or terminated from a job at least once—but it can still be extremely stressful. The good news is there are steps you can take to mitigate the impact on your life and finances.
Here, William Thrush, managing principal of Friedman, Framme & Thrusha, a LegalShield provider law firm, talks about what they are.
1. Make Sure You Receive Your Final Paycheck
Just because a company has let you go doesn’t mean they can stop paying you immediately. You’re still owed for the time you’ve already worked—and potentially for paid time off that you’ve accrued during your employment, as well as bonuses and commissions where applicable.
Make a list of everything you believe you are owed and cross reference it with the human resources department and your manager. If you are not paid in a timely manner, Thrush says you might be able to sue and, depending on your state’s laws, your employer may receive a penalty, which is a payout to you that can be as much as triple the amount you are owed.
2. Sign Up for COBRA
The Consolidated Omnibus Budget Reconciliation Act, otherwise known as COBRA, is a federal law that gives workers and their families the right to continue their health benefits for a limited amount of time if they experience involuntary job loss. Unfortunately, you will be responsible for up to 102% of the total cost—meaning that, while you retain the same level of health care, it’ll cost you much, much more. Check out your options on the federal marketplace through healthcare.gov. Thrush notes that you should sign up soon after you get the notice that you have been laid off. “If the time window for enrollment closes, which is 60 days from when you lose your job-based insurance, your former employer likely won’t reopen it for you,” he says.
3. Figure Out If You Are Entitled to a Severance Package
Employers are generally not required to pay severance unless there is a state-specific law requiring it, or a union contract, company policy manual or employment contract specifically stating that they must do so. Many full-time employees don’t have formal contracts with their employers, says Thrush, but they are still protected under an implied employment contract—meaning that the general terms of their employment are decided by state and federal law. If you have a contract that states you are owed severance, you must be paid in full immediately. If not, a company may eventually offer you severance in exchange for releasing any legal claims against them.
4. Roll Over Any Retirement Accounts
Some employers will allow you to continue to house your 401(k), or another type of retirement plan, in their sponsored benefit plan. But this is typically not a great idea—Americans have lost more than $1 trillion in forgotten 401(k) plans by leaving them behind in old employer accounts.
A better idea is to roll over your retirement savings to an individual retirement account (IRA) at a brokerage firm, a mutual fund company or a bank, where you can keep all your retirement savings in one place as you move through different employment opportunities. But Thrush notes that emptying out the account entirely is not a great idea. “You will be taxed and penalized,” he says, even if your retirement account has only a few hundred dollars in it.
5. Sign Up for Unemployment Benefits
With the exception of the past two years (when the federal government passed the Pandemic Unemployment Assistance program to aid people who lost their jobs during the COVID-19 pandemic), unemployment benefits are usually paid by the state you live in.
Generally, you can get roughly 26 weeks of assistance, totaling up to half of your previous paycheck. But you’ll want to check with your state’s labor department for exact details.
And be sure to apply immediately after being laid off—unemployment benefits can take weeks, and sometimes months, to process and be distributed. “The process of applying is cumbersome and time consuming,” Thrush says. So the earlier you get started, the better.
6. Figure Out If You Signed a Non-Compete or Confidentiality Provision
If you signed a contract upon the inception of your employment, you may have—wittingly or not—also signed a non-compete or confidentiality provision that can prevent you from looking for jobs with competitors for a certain period of time. The conditions may also outline what materials you can and cannot take from your previous job—for example, your email contacts. Thrush notes that being aware of these provisions will prevent many issues as you begin to look for new employment.
7. Return All Company-Owned Materials
Another way to protect yourself is to return all company-owned materials, like any electronics you may have been provided for remote work. “If the company gave you a cell phone or laptop, you may have to turn them back in,” Thrush says. Check with your manager or HR department for guidelines on how to do so—some will require physical drop offs while others will allow you to mail them.
8. If Necessary, Hire a Lawyer
The main reason you’d want to hire a lawyer after being laid off is if you feel you’ve been treated unfairly or were laid off for nefarious reasons, such as your sexuality or gender. But there are other instances—like not being paid what you are owed in a timely manner and being asked to sign legal documents upon your departure—when getting a lawyer makes sense too.
“If you feel something isn’t quite right, it’s best to double check and be sure,” Thrush says. Just as you wouldn’t pull out your own tooth, you also shouldn’t make legal decisions without consulting with a trained legal professional, he adds.
Brienne Walsh is a writer based in Savannah, Georgia. She contributes to Forbes, Rangefinder and MarketWatch, among other publications.
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