Monday, May 7, 2007

A Financial Checklist for Job Loss

Losing a job is one of the stressful things that can happen. You know you are in financial peril, but may find it hard to think straight and remember things that might be helpful. Here's our list of suggestions for softening the blow.

(a) negotiate for as many weeks or months of termination pay as you can get;

(b) ask for payment of any bonuses, awards or commissions you’ve earned or accrued, or which you can reasonably expect based on your job performance to date (if the award was in non-monetary form, like a trip to Hawaii, ask for the monetary value of the trip);

(c) request payment for accrued vacation and sick days, and any other time off you've earned or been awarded;

(d) ask for continuation of health insurance benefits (remember that you have COBRA rights to retain your employer’s health insurance for 18 months even if your employer doesn’t offer anything else; even though you’d have to pay the entire cost of COBRA coverage yourself, it's still worthwhile);

(e) ask for continuation of other insurance benefits, such as dental coverage or life insurance;

(f) obtain a written statement of the balance in your 401(k) account and any other retirement accounts you might have with the employer, such as an employee stock option plan--the assets in these accounts are yours (except possibly for matching funds from your employer if you haven’t had the job all that long) and you don’t have to negotiate for them; but you should make sure you know how much is there;

(g) claim any stock options, restricted stock and similar incentive compensation benefits that you have earned or are entitled to;

(h) ask about retaining any employer provided equipment, such as a laptop computer or a car, if this equipment is important to you;

(i) ask for the employer’s agreement not to contest your claim for unemployment compensation (if it looks like you’d qualify for unemployment comp);

(j) ask for your employer’s agreement to give you a good reference (or at least a neutral reference such as only a confirmation of dates of employment and positions held); and

(k) ask your employer for assistance from an outplacement or headhunter firm (that the employer pays for).

Your ability to obtain these benefits will depend on the circumstances of the situation, but they are something for you to think about. Certainly, if you don't ask for them, you probably won't get them. If you are represented by a union, consult with a union representative about your rights and options.

Some people try to negotiate for a temporary continuation of employment while they search for a new job, on the theory that it’s easier to find work if you are employed. Others may aim for the use of an office and telephone line at the old employer’s office while they search for a job, to maintain the appearance of being employed. You may want to consider these possibilities. But don’t lie to a prospective employer about your actual employment situation.

Carefully read anything your employer asks you to sign in connection with your termination. Almost always, an employer offering termination benefits will ask you to waive your rights to sue for discrimination, wrongful discharge and other potential legal claims or rights. If you’re seriously considering a lawsuit, don’t sign anything even if that means losing some of the termination benefits. You should be able to use COBRA rights to maintain your health insurance (unless you’ve engaged in “gross misconduct”). If you sign a document that waives your COBRA rights, you can still revoke that waiver for a limited period of time (which should be at least 60 days after your regular employer sponsored health insurance plan’s coverage ends). The assets in your 401(k) or other retirement accounts are yours in any event, so you don’t have to waive any rights to get them.

You may be able to get unemployment compensation. Do so if possible because unemployment comp will help to extend your financial resources.

Of course, start looking for another job as soon as you can. You can't build wealth for retirement unless you keep working. Losing a job can be one of the most emotionally difficult events of your life. But remember that it happens to large numbers of people every year; you are hardly alone. Don't lose faith in yourself. You'll have sunny days as well as cloudy ones. Hang in there and wait for the clouds to blow away.

Strange News: A Brazilian court has ordered a brewery to pay one of its beer tasters compensation for facilitating his alcoholism. See Hmmmmm. They paid him to drink so now they have to pay him for drinking. What's his incentive to stop drinking?

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