Whether you leave your job voluntarily or through a termination or lay off, there are a number of loose ends you will want to tie up before you walk out the door. Read on to learn about severance pay, your final paycheck, COBRA (the continuation of health benefits), and unemployment insurance.
Most employers are not required to provide severance pay to employees who are terminated or laid off. (A few states require employers who close a plant or lay off a large number of workers to provide salary or benefits continuation for a limited time, but most do not.) Nevertheless, many employers may offer one or two months' salary to employees who are forced to leave their jobs through no fault of their own. Some employers may be more generous to long-term employees by basing severance pay on the length of the employee's service to the company; a typical formula is a week's pay for every year of employment.
While no law requires severance pay, an employer may be legally obligated to give you severance pay if it promised to do so -- for example, through:
A severance package can include more than just money. If you are in a position to negotiate a package (perhaps your termination is questionable and your employer wants to keep you from going to court), consider asking for these other benefits:
Many states have laws that specify when departing employees must be given their final paycheck. Often, the time limit depends on whether you are leaving because you quit or because you were fired or laid off.
For example, in some states, employees must be given their final paycheck immediately or within a certain number of hours if they are terminated or laid off, but not until the next scheduled payday if they quit. Some of these state laws also specify whether your accrued, but unused, vacation pay must be included in your final paycheck. For more information, see Chart: Final Paychecks for Departing Employees, and contact your state's labor department.
A 1986 federal law -- the Consolidated Omnibus Budget Reconciliation Act (COBRA) -- and similar state laws provide for health insurance continuation when an employee quits, is laid off, or is fired for any reason other than gross misconduct.
Under COBRA, employers with 20 or more employees must offer them the option of continuing to be covered by the company's group health insurance plan for a specific period -- often 18 months -- after employment ends. Continued coverage is also available for the worker's spouse and dependent children. However, the worker must pay the full premium cost for continued coverage.
Your state might have its own health care continuation law that provides better or broader coverage than the federal COBRA. For example, it may cover smaller employers or provide more benefits than COBRA. Your employer must follow whichever law is most beneficial to you. To find out more about your state's law, contact your state insurance office or labor department.
Unemployment insurance benefits may provide some financial help if you lose your job, temporarily or permanently. Benefits will be less than your former pay and generally last for only about 26 weeks. (Depending on your circumstances and state, you may be able to extend your benefits for a total of up to 99 weeks.) However, not all out-of-work individuals are entitled to unemployment benefits: You will be eligible only if you lose your job through no fault of your own. To find out more, see Nolo's articles on Collecting Unemployment Benefits.
For an easy-to-read guide to the laws that protect you in the workplace, get Your Rights in the Workplace, by Barbara Kate Repa (Nolo).