Dealing With Job Loss? 5 Things To Consider

Company layoffs can be a time of real upheaval, but breaking things down into more manageable pieces may help. If you find yourself in this situation, here are five tips to consider as you get going—one step at a time.  

1. Understand the Terms

Check your employment contract and severance agreement to make sure you know what to expect next. Are you receiving severance pay? Will you be compensated for unused vacation days or sick leave? When will you receive your final paycheck? With so much up in the air, it can be helpful to ground yourself with a solid sense of what’s on the horizon. 

2. Check on Your Benefits

This change to your employment status will impact more than just your salary. You’ll also need to account for any workplace benefits you had been receiving. It’s important for you to confirm the status of all the benefits that were tied to your employer, including your retirement plan, any equity awards you may hold and your health insurance.

For retirement:

You generally have four potential options for your qualified retirement plans from former employers. You can:

• Leave your assets in your former employer’s plan, if permitted;

 

• When you start your next job, roll over your retirement savings into your new employer’s qualified plan, if one is available and if rollovers are permitted;

 

• Roll over the retirement savings into an individual retirement account (IRA); or

 

• Cash out and take a lump sum distribution from the plan. This would be subject to mandatory 20 percent federal tax withholding, as well as potential income taxes and a 10 percent penalty tax.

 

If you’re not sure which avenue might make the most sense for your situation, it can be a good idea to consult with a professional, such as a Financial Advisor, a legal professional or a tax advisor.

For equity compensation:

If you received equity awards from your former employer, the impact of the change in your employment status will depend on the type(s) of awards you had—and the specific details of your company’s plan.

Your first step should be to carefully review your plan documents to understand the impact of termination on your equity awards. In many cases:

• If you had restricted stock units, or RSUs, you’ll typically be able to keep any vested shares but forfeit any unvested shares, and RSU vesting stops on the final day of your employment.¹

 

• If you were part of an employee stock purchase plan, or ESPP, you will continue to own any company stock purchased under the ESPP but will lose the ability to purchase further shares under the plan. Any contributions for shares not yet purchased will be refunded to you via payroll. ¹

 

• And if you held stock options, either incentive stock options (ISOs) or non-qualified stock options (NSOs), pay close attention to any vested and unexercised options, as you’ll only have a set period of time (typically 90 days) following your termination before your awards expire and are returned to the company. Any unvested shares are no longer part of your portfolio. ¹

 

Plan details vary, so be sure to consult your documents to confirm the specifics of your former company’s plan. It may be helpful to have a list of questions on hand for any conversations with your former employer or HR representative.

For health insurance:

Ensuring that you have health insurance coverage is important. While your former employer might extend your coverage for a certain period of time after your termination, they aren’t obligated to do so, and you may need to consider an alternate course of action.Two options that are available to you are:

1. The Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows terminated workers the opportunity to continue receiving the benefits offered by their group health plan, for a limited time (18 months). Note that you may be required to cover the premiums in full, up to 102 percent of the plan, which can be costly.²

 

2. The federal Health Insurance Marketplace under the Affordable Care Act, which allows you to select an individual plan within your state. You can access the Marketplace at:  https://www.healthcare.gov/(opens in a new tab).

 

And don’t worry if it’s not open enrollment season. Involuntary loss of coverage is considered a qualifying life event, meaning you can apply at any time of year. 

3. Assess Your Financial Situation

Use this time to take a look at your finances. If you have emergency savings that you can fall back on temporarily, consider how long you can reasonably expect to rely on these funds. You’ll likely also want to evaluate your budget, prioritizing your expenses by necessity—for example, while you may still need to cover rent or mortgage payments, you might be able to pause some of your monthly subscriptions.  

4. Consider Filing for Unemployment

If you’ve been laid off and meet certain work and wage requirements, you may be entitled to receive unemployment insurance from the government, and you might want to consider whether filing for unemployment could be right for you. Your benefits—including your eligibility, how much money you’ll receive and how long you’ll be covered—will vary by state. You can typically apply online without needing to visit an unemployment office. 

5. Refresh and Reset

While this can certainly be a challenging time, it can also be an opportunity for a fresh start. Before you jump into the job search, consider refreshing your resume—especially if you were in your previous position for a while and have yet to add in your more recent accomplishments.

This may also be a good time to think through which aspects of your former job you especially enjoyed, as well as what you might want to change in your next role. Consider what you value in a workplace—from employer-sponsored mental health benefits to having the flexibility to work remotely to being given more opportunities to work across different teams—that can help guide your search. 

The Bottom Line

We understand that being laid off presents a range of challenges and can make thinking about your financial future stressful. One bright spot—according to the U.S. Bureau of Labor Statistics, 60 percent of workers find a new job in 14 weeks or less.³

Once you’ve taken a moment to regroup, it can be helpful to break things down into more manageable pieces, focusing on the items within your control. Often, the best way forward is simply one step at a time. 

Footnotes:

¹ myStockOptions, “Job Loss And Your Stock Grants (Part 1): Options, Restricted Stock, And ESPPs(opens in a new tab),” 2023.

² Centers for Medicare & Medicaid Services, “COBRA Continuation Coverage Questions and Answers(opens in a new tab),” 2024.

³ U.S. Bureau of Labor Statistics, “Unemployed persons by duration of unemployment(opens in a new tab),” 2024