Surviving Layoff

"Surviving Layoff

Preparing

In some cases, companies inform their employees in advance that layoffs are coming. (Some states and the feds govern advanced layoff notices under certain circumstances.) In other cases, it comes without apparent warning: You arrive on time for work on a Friday, but your security badge doesn't open the door. Ouch!

In either case, you might be able to read the writing on the wall. Often, companies start showing signs that they are trying to avoid layoffs or worse, preparing for the inevitable. If you think about it, you might know as much or more than some of the people "upstairs." For example, if you work in sales, you might know that quotas are way below norm. If you work in field engineering, you might notice far fewer customer installations. Below are some other signs.

• Hiring freezes
• Earning warnings
• Spending warnings
• Budget cuts
• Expense reductions
• Travel cutbacks
• Restructuring
• Negative news articles
• Project cancellations
• Management resignations
• Termination of temps and contractors
• Attrition without replacement hiring
• Reductions in support staff
• Competitors, suppliers or customers laying off

If your company's competitors, suppliers or customers are laying off, it's likely your company will too, especially if economic conditions are affecting your industry. Check the layoff reports from HR Live and mass layoff statistics from the U.S. Bureau of Labor Statistics. Search the Net and your local newspapers, too, for layoff articles pertaining to your industry.

Do things like this always mean that layoffs are coming? Of course not. Companies have seasonal and economic sales dips all the time, and are always looking for ways to improve the bottom line. So, if you see only one or two signs, it might not be a big deal. But if you see more, especially along the lines of earning warnings, budget cuts, hiring freezes, restructuring, and layoffs in your industry, it just might be time to get your resume up to date and start looking for a new job. In the meantime, it might be a good idea to cancel your vacation and implement financial measures.

To add insult to injury, you may be escorted off the premises shortly after you receive notice. If you think you might get the axe soon, discreetly prepare in advance.

Never been laid off or been awhile since your last? Below is what you might expect to receive in a severance package. It may differ from yours, depending on your ex-employer's policy. Severance packages typically include benefits and with few exceptions, providing benefits is optional for employers.

On the other hand, everything is negotiable. Since employers typically want to avoid legal hassles, you might have leverage to work out a better deal. (For more about that, see Negotiating Tips in the sidebar.) The bad news is, your ex-employer might offer a standard, non-negotiable package. That's typical of large corporations. Additionally, in a state that supports at-will employment, your employer can terminate you without offering much of anything, the same as you can just quit on the spot, without obligation. So, negotiating is worth a try, but don't push your luck too much or you might lose even the standard package.

Severance Pay
For massive layoffs exceeding a certain number of employees, some states and the Feds require employers to notify affected employees in advance. So, although you might not have to report to work in this case, your employer will still send you regular paychecks and offer benefits to which you're entitled through your notification period. But that's not really severance pay by definition. It's regular pay in compliance with the law. Severance pay is extra compensation for losing your job through no fault of your own, however meager it might be.

Typical severance pay is based on length of service. For example, you might receive one week's pay for each year of service. Some companies are more generous. But since there are no US laws that directly regulate severance pay, how much you'll receive—if anything—is up to your ex-employer, unless you can negotiate more. Your ex-employer may pay it all in one lump sum or in scheduled checks. You'll likely also receive pay for unused vacation, and maybe even unused floating holidays and sick days.

But in their infinite wisdom, just when you need money the most, some employers fail to stop voluntary deductions or even offer to. Cash in hand might be more important at time like this, so before you receive your severance pay, you might ask the payroll department to stop deductions, such as contributions to your 401(k). (Same goes if you get advanced notice, as explained above.) To make matters worse, the tax man will take his share, too. Worse, if you're paid in a lump sum, you might be taxed at a higher rate as though it's a bonus! You might get some of it back in your next tax return, but that doesn't help much if you're laid off early in the year. To avoid the higher tax rate, you might also ask the payroll department to spread out your severance pay in a few checks. But don't count on it.

Separation Agreement
At first glance, it may look like an innocent, explanatory letter on company stationary, but it's essentially a contract that specifies the terms of your layoff. It will likely ask you to agree that you will not disclose company trade secrets. But the real "gotcha" is that, in so many words, it might also ask you to agree to accept things as they are and not hold the company liable for terminating you. To encourage you to sign it, your ex-employer may offer you more severance pay or a better, overall package. That's typical, and most people just take the money and run without thinking ahead. But according to a very expensive labor attorney with whom this writer once consulted, it's a legal and binding bribe in California. Since this contract might be binding in your state too, you may not want to sign it until you've played out all your options. (See Negotiating Tips in the sidebar.) The mere fact that they're trying to get you to sign such an agreement for extra severance gives you leverage. You might also think twice about signing it, if you seriously feel that you've been terminated for illegal reasons such as age, race or gender discrimination, under the cover of a layoff. If it includes a noncompete clause, think twice about that too, as it limits the work you may seek at a time when you need work most. It might be unenforceable in your state, especially if it's unreasonable in scope. But your ex-employer might try anyway and you may never know. See an attorney first if you have any doubts about signing it.

Outplacement Services
Your ex-employer may contract to outplacement services consultants on your behalf. Typically, these services don't find you a job per se, but rather they help you to help yourself, at no charge to you. They will likely offer seminars and workshops that boost your confidence, and help you to practice interviewing and polish your resume. They might also provide free access to computers, printers, phones, fax machines and job listings.

Health Insurance
Employer-provided coverage may end on the day you're laid off or very soon thereafter. But, by US law, the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to continue your current coverage at group rates, plus a small administration fee. If you qualify, your ex-employer should give you the paperwork and instructions or tell you where to get them. As part of your package, they might also pay the first month or more for you, but eventually, you'll likely have to take over the payments. Although COBRA is convenient, you might be able to find a better deal. But be sure you investigate private plans to see if they have a waiting period before they'll cover you for previous or existing conditions. Get the free Adobe Acrobat Reader to read about COBRA.

Life Insurance
Employer-provided coverage for this also typically ends on the day you're laid off or very soon thereafter. Life insurance is not covered under COBRA, but your ex-employer may pay it for a month or more, and then offer you a continuance option. It usually isn't cheap and you may be able to find a better deal. On the other hand, new private plans may not cover you for previous or existing conditions. Be sure to investigate them thoroughly, before you decline your ex-employer's plan.

Disability Insurance
The same as life insurance. Alternately, you might be covered by your state-sponsored plan for free, but the weekly benefit amount may be far less than private plans. The Social Security Administration also offers disability benefits to qualified individuals and their families, but be sure to read the fine print before you decline other plans.

Retirement Plans
Information that explains what your options are for 401(k), profit sharing and other employer-sponsored retirement accounts. According to IRS rules, your plan administrator must provide a written explanation of your options 30-90 days before the final date on which you must take action. If your savings exceed $5,000 or $3,500 in some plans (both subject to change), you might not have to do anything unless you want to. Your plan will continue to earn or lose depending on market conditions. You can still contribute on your own, but your ex-employer will likely stop matching contributions on the day of your layoff or soon after.

Stock Options
Information explaining what your choices are for company stocks that you're saving to purchase or already have the option to purchase. Typically, within a certain time after you're laid off, you'll have to purchase the options in which you are vested or you'll lose them. You'll likely lose options in which you are not yet vested, if your ex-employer does not offer other arrangements. If you're in a payroll-deduction plan that saves money for stocks you have not yet purchased, you'll get your money back. Stocks you've already purchased are yours to keep or sell whenever you want.

Unemployment Benefits
How to contact your state employment service to file a claim for unemployment or disability compensation, and apply for job services, training programs, and other benefits.

Enduring
If you're laid off, you've got to keep getting up in the morning. You will find another job. Remember, you have skills!

For tips on how and where to conduct your job search on the Internet, see Getting Started with Online Job Searching. Also see Interview Advice and Writing Resumes to get ready to land that new job. For your convenience, the Topic Guide has these resources and just about everything else you need to find and land jobs, all neatly organized in one place by subject.

To avoid worry and depression while you're waiting for interviews, keep your mind busy and make yourself feel useful by working on your house, car, yard, hobbies, etc. You might even create a Web résumé while you have some extra time on your hands, and learn some HTML to boot.

Better yet, consider enhancing your skills through training. In fact, now might be a good time to go for that career change you've been contemplating for years, but never had the time because you had to work full time. Your state employment service offers training programs for free if you qualify, and some temp agencies do too.

Speaking of temp agencies, consider temping until you find a permanent job. Temp job sites and your state employment service can help you land them.

Oddly enough, even after a layoff some departments still continue to hire, especially for mission-critical positions. But many an HR department is negligent in finding openings for which laid-off workers are qualified. Negligence aside, many don't guarantee that they'll call you back if a position for which you qualify opens, but they'll still consider you if you stay in touch. Check with the HR department periodically or contact department heads directly. Ask former work associates to keep an eye on the internal job list for you. If you have transferable skills, you might qualify for a mission-critical position in another department or at least work on contract temporarily. Even your own department might contract back to you, so you can finish the projects on which you were working. You might even get hired back a few months down the road if the company's financial condition turns around. If you can get reinstated within a few months, you might retain your tenure and benefits. They say you should never go back, but that's really a personal choice. It might be better than starting over again at a new job. But don't just sit around hoping for this to happen, as it's a mistake many laid-off workers make while they're in denial. It's okay to hope, but keep looking for a new job in the meantime.

It's a good idea to have written proof that it wasn't your fault you were terminated. Ask your ex-boss to write a recommendation letter that also explains why you lost your job. See Letters of Recommendation for tips and samples you may download and give to your references. See the Letter Writing Desk for samples of other types of business letters to help you in your job search.

Don't be discouraged if you don't land a job after several interviews. When employers don't hire you, they're not saying that you're a crummy, worthless individual. It's not personal, it's just business. Few workers land a job in their first couple of interviews. Keep at it and you'll eventually find a good match."

- from about.com

<Note from JobFairy.com: If you think layoffs are in the future, don't wait to look for another job. Don't wait to cut back your spending either. Refinance now if it might benefit you, because they probably won't do it if you're not employed. Tell them you will use the money to remodel your house. Pay off as much debt as possible before you're laid off. Once you're laid off, make the minimum payments on everything and don't spend a penny except for emergencies. Make sure that you don't use your work computer to look for a job in any way, and that you don't synch your PDA to your work computer if you're keeping interview appointments on the handheld. That way, with any luck, you'll get the big layoff package AND a new job within days of being let go. They'll wait for you to quit on your own if they think you're looking. So don't let them know.>