Can I get unemployment if I quit to avoid getting fired?

Question:

My company recently had to lay off a group of employees, including me. My manager told me I could quit rather than being laid off. That way, I won't have to explain why I lost my job to potential employers. Whatever I decide, my last day will be the end of the month. Is there any downside to saying that I quit rather than that I was laid off?

Answer:

The potential downside to this strategy involves unemployment benefits. Although each state's unemployment laws are a bit different, they all follow the same basic structure and design. A key part of that design is that unemployment is available only to employees who are out of work involuntarily and through no fault of their own. If you truly quit your job, you could be ineligible for unemployment.

Most states include an explicit exception for employees who are offered the opportunity to quit rather than being fired (called quitting "in lieu of termination"). In this situation, you don't have any choice in the matter. You are not quitting voluntarily, and you are not at fault in losing your job. Therefore, you likely won't be ineligible for benefits.

However, you may have to spend some time explaining the situation. Often, if you check the box marked "quit" on your state's application form, you can expect to answer more questions (in writing or by phone) about the exact circumstances of your separation. Then, the state's unemployment department will make a determination as to whether your decision to leave was voluntary or not. As long as you make your case and your employer doesn't change its tune, you should still be eligible for benefits. But simply deciding to be laid off will eliminate all of these steps and potential trouble spots.

Besides, having a layoff on your "record" won't necessarily hurt you. Employers understand that layoffs are different than terminations for cause. You can explain to prospective employers that you were laid off as part of a group and that the company was trying to meet a specific financial goal (rather than laying off poor performers, for example).

It also isn't clear that prospective employers will be overly impressed by an applicant who quit a previous job without having a new one lined up. To explain this situation, you'll have to explain why you quit, and then you're really back to explaining why you were laid off.

At the end of the day, it might make the most sense to be laid off. It will make the process of collecting unemployment easier, and it will simplify your conversations with prospective employers.

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