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Q: Am I entitled to be paid for my unused vacation and sick time?
- A: Not necessarily. Payments for unused paid time off (PTO) are usually part of a severance package. Employers aren't required by law to offer severance packages to laid-off employees. And, even if your employer offers you a severance package, it doesn't have to include payments for unused PTO. Note that state law may require payment for your unused vacation time as wages.
Q: Can I get unemployment compensation? If so, how much and for how long.
- A: Unemployment compensation is controlled almost entirely by state law, and the laws usually vary a lot from state to state. In some states, accepting severance pay may bar you from collecting unemployment, while in others states it won't. If you're eligible, your payments will be a percentage of your salary at the time you were laid off.
Also, there's usually a minimum and a cap on how much you'll get paid in each check. For example, in California, the least you will receive is $40 and the most is $450, per week. In Arizona, however, the limits are $60 and $240, respectively. Additional amounts may be available if you have dependent children or a spouse. Also, you'll be paid only for a certain time period, which is 26 weeks in most states.
These limits and caps are based on the idea that unemployment benefits are meant to be temporary. They're intended to help you make ends meet while you look for a new job.
There's additional help for those receiving unemployment benefits. The Emergency Unemployment Compensation (EUC) program extends benefits for up 33 weeks, and varies by state. See your state's unemployment agency Web page for more information. The American Recovery and Reinvestment Act of 2009 adds an extra $25 to your weekly benefit amount between February 22, 2009 and July 3, 2010. The same stimulus law grants an income tax exemption for the first $2400 you receive in unemployment benefits.
Q: Do I have to give back severance pay to my employer if I'm later rehired?
- A: It depends on your severance agreement. It's common for an employer to require a laid off worker to return any unused portion of his severance pay as of the date of rehire. For example, if you received 10 weeks of salary as severance pay and you're rehired five weeks after you were laid off, you may have to repay five weeks worth of your severance pay. Some employers won't consider an employee for rehire until the time period covered by severance pay has passed.
Q: Does my employer have to tell me why I'm being laid off?
- A: Most states don't require your employer to give any reason for the layoff. Some states do require, it though. As a practical matter, most employers will give you a reason, such as lack of demand for your employer's goods or services, cost-saving measures, such as outsourcing, etc.
Q: Doesn't an employer have to give me notice before laying me off?
- A: Generally, no. Employers can layoff employees without giving them any prior notice. Most workers in the US are at will employees, meaning they can be laid off at any time and for any reason, so long as it's not unlawful, such as because of your race or gender. There are two important exceptions where notice must be given before you're laid off. First, if you have an employment contract, the employer usually has to give you notice of and the reason for the layoff.
Second, if your employer has more than 100 full-time workers and plans on laying off a large portion of them (50 or more, for example), the federal Worker Adjustment and Retraining Notification Act (WARN) requires your employer to give you, and others targeted for layoff, 60 days' advance notice of a layoff or certain plant closings. Many states have laws similar to WARN that may have different notice periods or different requirements for the number of workers needed to be laid off in order to trigger the notice requirement.
Q: I came back from leave just find out that I'm being laid off. Is that legal?
- A: Maybe. Employers have to make tough decisions, especially when business and the economy are down. Layoffs happen all the time, and sometimes they just happen to take place, or they're planned out, while an employee is out on some sort of leave, like for a short-term disability or maternity leave under the Family and Medical Leave Act (FMLA). Your employer can lay you off after you return from leave unless you can show that the employer acted unlawfully.
Generally, you can't be laid off or fired because of characteristics like your age, race, gender or disability. This is unlawful employment discrimination. Likewise, you can't be laid off on grounds that you exercised rights that are protected by law. This is called retaliation or retaliatory discharge. Taking FMLA leave, filing a claim for worker's compensation, or informing law enforcement or the government about illegal work-related activities are good examples.
To prove one of these claims, you'll have to be able to show that you were laid off because of your disability or because you took leave, for example. If the employer can show that there was some legitimate reason for your being laid off, then you may not have a case.
This can be a very complicated area of law. If you think you've been treated in a discriminatory way, you talk to your attorney immediately.
Q: I'm member of the US military. Can I be laid off from civilian job?
- A: Generally, under the Uniformed Services Employment and Reemployment Rights Act (USERRA), your employer has to hold your job while you serve in the armed forces and then rehire you to a job that you would've held if your employment wasn't interrupted by your military service. If layoffs happen while you're away on active duty, the employer has to show that you would've been laid off even if you weren't away on duty. For example, if you would've been laid off even with your seniority, or if the employer shut down operations and made a reduction in force (RIF), then you can't avoid a layoff.
Q: My employer has to give me severance pay, right?
- A: No, there's no law that requires employers to provide severance packages. So, unless you have an employment contract that states that the employer has to pay you a certain sum of money or provide other benefits, or maybe an employee handbook that outlines if and when severance will be paid, you're not entitled to severance pay. And, just because your employer offered severance in the past doesn't mean that it has to continue to do so. Your employer can change it's policy on severance at any time. So, it's a good idea to know your employer's severance policy long before talks of layoff even begin.
Q: My employer is advertising my job as "open." Can it do that while I'm still employed?
- A: Yes. There's no law against posting or advertising a job opening, even if you're doing the job that's being advertised. You don't have to jump to the worst conclusion, though. You may want to go to your boss or the human resources department and ask about the advertisement. Maybe your employer is increasing staff, or maybe you're getting a promotion and the employer needs to fill your position. If you don't like the answer you get, or if you feel uncomfortable asking in the first place, then you can either sit back and wait to see what happens, or you can start working on your resume and looking for a new job.
Q: What happens to my 401(k)?
- A: Usually, your employer will stop making contributions to your 401(k) account after you're laid off. You typically have a choice of what to do with the money in the account, though. You can either leave it with your former employer, "roll it over" into a 401(k) with your new employer, roll it over into an Individual Retirement Account (IRA) that you open in your name, or cash it out. There are tax consequences and other financial matters you need to think about here, so you may want to talk to your tax attorney or financial advisor about which option is best for you.
Q: What if I still owe on a 401(k) loan?
- A: You have to pay back any balance still owed on the loan, usually within 60 to 90 days of the date on which you were laid off. Your employer will tell exactly how long you have to repay it. If you don't pay it back within the time given, the loan will be treated as a distribution from your 401(k). And, because you weren't retired at the time of the loan, it's an "early withdrawal," which means you'll have to pay a penalty of 10% of the loan amount. In addition, you'll have to report the entire amount of the loan as income on your federal and state income tax returns, which will likely increase the amount of taxes you'll owe for the year.
Q: What's "outsourcing?"
- A: Basically, it's when a business or company hires workers, other than its own employees, to perform certain jobs or tasks. The company can save a lot of money through outsourcing because, for example, it doesn't have to provide benefits to non-employees (like contract workers and freelancers), such as health insurance or a pension plan. And, wages are typically lower in foreign countries than they are in the US.
Q: What's the difference between a layoff and a RIF, "reduction in force?"
- A: Practically speaking, there's no difference. The end result is that you're losing your job, no matter what the employer calls it. Technically, however, there is a difference. A layoff is when workers are temporarily removed from the payroll, usually as a cost-saving measure, and there's some hope or indication that the workers will be called back to work when the employer's financial condition gets better. A reduction in force (RIF), on the other hand, is the complete elimination of jobs or positions, such as when a business stops making or selling a specific item, eliminates a department or moves its business operations overseas.
Q: Will my insurance benefits stop?
- A: Unless you can get your employer to agree to continuing your insurance benefits as part you severance package, your employer will stop paying for your health, disability and life insurance once you're laid off. So, if you want these insurance coverages, you'll have to buy your own policies, at least until you find a new job with benefits, except for health insurance, maybe.
If your ex-employer has at least 20 workers and provided a group health plan, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires your employer to offer you continued coverage under its group health plan. Your spouse and children are also entitled to coverage. The cost is usually expensive, though. Typically, employers and employees share the cost of insurance. After you're laid off, the employer will stop paying its contribution, so you have to pay all costs of the insurance, plus up to a 2% fee to cover administrative costs. And, in most cases, COBRA coverage expires after 18 months.
The American Recovery and Reinvestment Act of 2009 provides assistance in paying premiums under COBRA to eligible individuals. This program covers 65% of the premium amount for up to 9 months.
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