Labor and Employment

Losing Your Job FAQs

By Lisa Guerin, ‚ÄčJ.D., Boalt Hall at the University of California at Berkeley
Learn about severance, unused vacation and sick leave, unemployment compensation, and more.

Q: Am I entitled to be paid for my unused vacation and sick time?

  • A: It depends on your state's law and your employer's policy. Some states, including California, require employers to pay employees for their accrued, unused vacation time when the employment relationship ends. Some states require employers to pay out vacation only if they have a policy stating that they will do so, or if they have no policy saying they will not. Still other states leave the matter entirely to the employer's discretion.

No state requires employers to pay out unused sick time. However, if your employer combines sick leave, vacation time, personal days, and so on into a paid time off (PTO) program, PTO must generally be treated like vacation time. In other words, the employer may have an obligation to pay out that time, if state law requires it. For more on your right to accrued vacation, see Vacation Time After Leaving an Employer.

Q: Can I get unemployment compensation? If so, how much and for how long.

  • A:Unemployment is available in every state, but the rules on who is eligible, how much you will get, and how long you will receive benefits differ from state to state. Unemployment benefits are generally available to employees who are out of work temporarily, through no fault of their own. If you quit voluntarily, you won't be entitled to benefits. The same is true if you are fired for misconduct. However, states define what counts as misconduct or as a voluntary quit differently.

Every state has its own formula for determining how much an employee will receive each week, up to a maximum amount set by state law. And, although many states allow employees to collect benefits for up to 26 weeks (as long as you remain unemployed and are searching for work), some states set shorter limits. To find out what your state allows and requires, select it from our articles on collecting unemployment.

Q: Do I have to give back severance pay to my employer if I'm later rehired?

  • A:It depends on your severance agreement with your employer. No law requires your employer to let you keep severance or to require you to pay it back. Some employers allow employees to keep their severance, even if they are rehired soon after losing their jobs. Other employers require employees to repay severance intended to replace their salary beyond their rehire date. For example, if you received 20 weeks of severance, but are rehired 16 weeks after losing your job, your employer may require you to give back that extra four weeks of pay. For information on severance, including common provisions, see Know the Details of Your Severance Package

Q: Does my employer have to tell me why I'm being laid off?

  • A:Most states don't require your employer to provide any reason for a layoff. In some states, employers must provide (or employees may request) written notice of the reason for termination. In Georgia, for example, employers must provide a separation notice, explaining why the employee was terminated. Unless your state has this type of law, however, it does not have to provide a reason for laying you off.

Q: Doesn't an employer have to give me notice before laying me off?

  • A:Generally, no. Most employees work at will, which means you may be fired at any time, for any legal reason, with or without notice. If you are an at-will employee, you have no right to notice before you lose your job.

There are a couple of exceptions to this rule, however. If you have an employment contract that requires your employer to give you notice, it must comply with that provision. For example, if your contract says your employer must give you two weeks' notice before terminating the employment relationship, you are entitled to that notice. If your employer wants to fire you more quickly, it usually has to pay you for the notice period (even if it doesn't require you to work during that time). First, if you have an employment contract, the employer usually has to give you notice of and the reason for the layoff.

If you are part of a large layoff or plant closing, you may also be entitled to advance notice. Under the federal Worker Adjustment and Retraining Notification (WARN) Act, you are entitled to 60 days' notice if your employer has at least 100 employees and (1) it lays off at least 500 employees, or a smaller number that constitutes at least one-third of its workforce, or (2) it closes a single employment site, unit, or facility that results in job loss for at least 50 employees. Some states have similar requirements. For details on what the WARN Act requires, see Notice of Layoffs Under the WARN Act.

Q: I just came back from leave to find out that I'm being laid off. Is that legal?

  • A: If you took leave pursuant to a law that protects your right to return to work, you may not be fired because you took leave. For example, if you took leave under the federal Family and Medical Leave Act (FMLA), you have the right to return to your job when your leave is through. Your employer may not retaliate against you for taking leave. It would be illegal retaliation for your employer to fire you because you took FMLA leave.

However, your leave does not protect you from being fired or laid off for other reasons. For example, if your employer decided to outsource your department's work and laid off every employee in the department, you would not be entitled to keep your job simply because you were out on FMLA leave. As long as your layoff or termination is not based on your leave, it is legal.

Q: I'm a member of the US military. Can I be laid off from my civilian job?

  • A:The Uniformed Services Employment and Reemployment Rights Act (USERRA) requires employers to give employees up to five years of leave for military service, with reinstatement when they return from duty. You are entitled to reinstatement to the "escalator" position: the position you would have held, with all raises, promotions, and so on you would have received had you been continuously working throughout your leave.

The escalator can go down too, however. If your position was eliminated while you were on leave, and that would have happened whether you were working or away, you may not be entitled to reinstatement.

Once you return to work, your job is protected in certain ways. Your employer may not fire you or lay you off because of your military service. In addition, you may not be fired for up to one year after you return without good cause.

Q: My employer has to give me severance pay, right?

  • A: A few states, including Hawaii, require employers to pay a small amount of severance to employees who lose their jobs in a mass layoff. Otherwise, however, your right to severance depends on your employer's policies and your contract, if you have one. If your employer has a policy of paying severance to employees in your situation, it must follow that policy. And, if your employment contract promises severance, your employer must provide it or risk a lawsuit for breach of contract. Otherwise, however, your employer isn't obligated to pay severance.

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 that is currently filled. You may want to ask your human resources department or your manager what the posting means: Are you going to lose your job or have a new coworker? If you get bad news, you may want to talk to a lawyer to find out if you have any grounds to fight your impending termination.

Q: What happens to my 401(k) when I'm laid off?

  • A:You typically have a choice of what to do with the money in the account. 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:Outsourcing happens when a business or company hires workers, other than its own employees, to perform certain jobs or tasks. Outsourcing can save money: The company that takes over the work may charge less than the employer would have to pay its own employees to do the work, taking taxes, benefits, and other employee costs into account.

Q: What's the difference between a layoff and a RIF, "reduction in force?"

  • A: From a legal perspective, there's no difference between a layoff and a RIF. In both job actions, employees lose their jobs, often because of lack of work or for financial reasons. In some industries (or pursuant to certain union contracts), employees who are laid off have the possibility of getting rehired when, for example, work picks up or economic conditions improve; in a RIF, by contrast, the jobs are gone forever. Many people use these terms interchangeably, however.

Q: Will my insurance benefits stop?

  • A:Unless your employer agrees to continue your insurance benefits as part you severance package, your employer will likely stop paying its share of the premium 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.

If your 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. However, you must pay the entire premium, including any share your employer used to pick up, plus a fee of up to 2% to cover administrative costs. And, in most cases, COBRA coverage expires after 18 months.

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