The Layoff Survival Kit
This article offers general information on legal and financial matters relating to employment. For specific information relating to your situation, please consult an attorney, financial planner or appropriate government agency.
Now that you've lost your job, you need to hurry up and find a new one, right? Wrong. You've got to buck up and tie up loose ends with your ex-employer in order to secure your finances and insure your health. Add these items to your to-do list for your first week out of work.
Salary and Accrued Vacation Time
Hopefully, as you walked out the door with that box full of personal possessions, your boss slipped a check in your pocket that covered your salary through the last day, pay for unused vacation and so on. But what can you do if your former employer can't -- or won't -- pay you in full?
First, be sure you and your ex are on the same page regarding what you are owed. Contact the human resources director and synchronize your records. Then call your state labor board and make sure you understand what the law mandates. Some states require that the employer pays you in full on your last day of work, others give the employer some slack. Similarly, some states mandate payment for unused vested vacation time, others may not. Your local unemployment office will be able to help.
If your ex-employer initially refuses to comply with the law, "you can use state enforcement agencies to sue an employer," according to Paul Gregory, special employment council with the law firm Greenberg Peden in Houston. If instead you hire your own lawyer, those bills could easily exceed the amount of your claim, Gregory says.
What if government agencies are of no help? "Worst-case scenario, you'll have to chase your money in bankruptcy court," Gregory says. Just be aware that this is a long haul, and companies may often have few assets that can be liquidated to pay off creditors.
When your defunct employer disappears from the face of the earth, who creates your W-2 report of wage income? Maybe no one. If you haven't received the form by mid-February, contact the IRS to request a substitute W-2. You will be asked to produce your final paycheck of the tax year.
Don't fool yourself: You risk disaster if you allow health insurance to lapse between jobs -- even if it's only for a few weeks. The federal COBRA law, which gives you access to your ex-employer's group insurance plan after you leave the company, may be the best insurance bridge. With the premium reductions and additional election opportunities outlined in the economic stimulus package, you will need to pay 35% of the premiums, and coverage lasts up to nine months.
When you receive an offer for your next job, "bargain with the new employer to start your insurance" and waive the standard waiting period, advises Meena Patel, former human resources director and associate general council for a financial information Web site.
As an employee, you've earned the benefit of having your employer pay unemployment insurance premiums. This is no time for misplaced pride: When you file for unemployment payments, you're making an insurance claim, not asking for a handout.
"People should apply quickly," says Gregory. There may or may not be a waiting period in your state; call the unemployment office immediately to find out how and when to file a claim in your state. Also find out whether any severance payment you receive will disqualify you from collecting unemployment. If you do collect, the payments may only replace a small portion of your salary, but they're still worth the trouble of the paperwork.
If you're leaving a business that's in trouble, chances are your company stock and options aren't worth nearly what they were six months or a year ago. But that's no excuse for avoiding the task of managing of these complex financial instruments; there's just too much money at stake.
"Speaking to colleagues isn't always the best source of information," says Scott Price, principal of Scott B. Price & Co. of San Francisco, a tax advisor. For one thing, different people in the organization may find themselves in different situations with respect to option strike prices, tax liabilities and so on. Also, after you've left the company, additional rules come into play. For example, in most cases, former employees have just 90 days from their termination day to exercise their options, according to Price.
Take our advice and spend a few bucks on a financial advisor well-versed in the intricacies of employee stock options. Options may not make you worth your weight in gold, but they could turn out to be the silver lining in the cloud that's hanging over your career.
If your concerns haven't been addressed here, perusing the Web is a great resource.