9 Things to Do Immediately After Getting Laid Off

By Laura Adams, MBA

If you've ever gotten laid off or fired, you know how upsetting and disorienting it can be. Understandably, you might feel blindsided and unsure about what to do next.

Even if you voluntarily leave a job, there are critical steps you should take to avoid costly mistakes. So, whether you plan on saying goodbye to an employer or get laid off unexpectedly, these nine tips will help you protect your finances and land your next job.

1. Take time to review documents carefully. 

You should never sign documents when you're surprised or unclear about what's happening. Instead, ask how much time you have to return any required termination paperwork and carefully review it. If you have legal or financial questions about your situation, consider getting professional advice, such as from an attorney or accountant.

2. Get clarification you might need later.

If you don't receive termination paperwork, ask for documentation explaining the circumstances, such as getting laid off due to corporate restructuring or merger. You might ask for documentation about any significant contributions you or your team made to the company.

Also, get several recommendations from your managers, coworkers, and subordinates. That information and clarification could make a big difference to prospective employers.

3. Negotiate severance compensation and benefits. 

You can often negotiate severance pay, unused vacation and sick time, and other benefits when you leave a job. Seek help from a financial or legal pro if you're unsure how to proceed or need a go-between. Then put your request in writing before any signing deadlines. 

If you receive one or more severance payments, do your homework to find the best savings account to keep it. For instance, using a high-yield account allows your money to earn more than regular savings and remain safe and liquid until you land your next career opportunity. 

ALSO READ: 5 Savings Strategies for Success in 2023

4. Spend your FSA. 

If you have funds in a flexible spending account (FSA), which employers may offer to help workers pay for healthcare and childcare expenses, knowing what happens to them when you leave your job is essential.

Unless you qualify for a grace period, employer-paid FSA funds typically return to the employer. So, if you voluntarily leave your job, empty the account before giving notice. 

Note that a health savings account (HSA) is portable, so you can take it when you leave a job. You might also have a 401(k) or a 403(b), which isn't time-sensitive, so you can wait to make retirement decisions, such as doing a tax-free rollover.

5. File for unemployment benefits. 

If the reason you get terminated isn't due to "cause," such as poor performance or violating company rules, you can apply for unemployment benefits, which temporarily replace a portion of your income. However, you're never eligible if you voluntarily leave a job.

According to Finder’s Consumer Confidence Index, 78% of Americans say the US will enter a recession within the next 12 months. So, even if you believe you can get a job quickly, receiving unemployment benefits can take time — immediately applying is best if it takes longer than expected.

6. Compare health insurance options.

After you get laid off or voluntarily leave a job, insurance benefits typically end on the last day of the same month. However, you may be eligible for COBRA continuation coverage for up to 18 months. 

If you pay the entire premium, COBRA allows you to continue the same medical, dental, and vision insurance. That could be much higher than what you paid as an employee because employers usually subsidize a portion.

If you get a new job quickly, paying COBRA to bridge a short coverage gap might make sense. However, shopping for health and dental plans at Healthcare.gov can be the most affordable option. You may qualify for reduced premiums based on your expected annual income and family size.

7. Shop for life insurance. 

In addition to getting a health plan, you may need to replace other policies such as life insurance, which ends at the end of the month you leave a company. It's easy to compare life insurance quotes and find affordable options to protect your dependents.

8. Evaluate your career goals.

Take some time to evaluate what you genuinely want from your work and personal life. While getting laid off may not be what you wanted, it could be the catalyst for starting a new career. For instance, you might decide it's an excellent time to relocate, return to school, start a business or get licensed to become a real estate agent. 

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9. Update and share your resume. 

If you don't regularly update your resume, now's the time to polish it based on the job you want next. It's OK to show you're unemployed and briefly explain the circumstances.

Then use your new resume to create job search profiles on various sites like LinkedIn and Indeed. Also, let your professional contacts and friends know you're seeking an opportunity. Making the most of a layoff could be a springboard to a better career and future.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.