An employment lawyer’s guide to surviving layoffs: what to do before, during & after a layoff.

There’s no way to sugarcoat it. Layoffs suck. One day you’re killing it at work, and the next you get a meeting invite with a skip-level manager or HR rep you’ve met maybe once. You think, this can’t be good. And it’s not. You learn your company is “restructuring”, “right-sizing” or whatever corporate buzzword used today to signal it’s cutting jobs. Accompanying the news is this sudden worry about losing a stable paycheck, health insurance, and connections you’ve forged over the years.

It’s awful.

But there are resources to help you make it through. In this guide, I discuss many of the resources and strategies I share with my clients navigating an unexpected job loss. Whether you’re panicked about potential layoffs, or in the throes of being laid off, I hope you’ll find them helpful too.

What is a layoff and how is it different from being fired?

A layoff is a type of involuntary job loss. Getting laid off may not feel like it, but it’s different than getting fired. When you’re laid off, your employment ends due to circumstances beyond your control: like a restructuring, reorg, or other cost-cutting measures. But when you’re fired, your employer lets you go based on (perceived) poor performance, bad behavior, or some other policy violation.

Another key distinction between the two is notice. Usually with a firing, you’re not provided much notice in advance unless you belong to a labor union or you’ve signed an employment contract that says you’re owed a heads up first.

In some cases, you may get advance notice of a layoff. If so, that’s because federal law requires that you (and your state’s labor department) get a heads up. The federal WARN Act says you’re entitled to 60 days’ prior notice of a layoff if your employer has 100+ employees and is laying off 50 (or more) of them at the same time. The notice period designed to help you prepare for unemployment, start looking for a new job, and enter any job training or retraining programs that interest you.

If this is your first time being laid off, you may have never seen a WARN notice before and aren’t sure what to look out for. So let me show you what an actual one looks like:

A proper WARN notice will be in writing, directed to you individually, and let you know when the layoff will occur. If your employer doesn’t give proper notice, you may have legal recourse to obtain back wages and benefits for each day of the violation. You should consult with an employment lawyer in your area to explore those options before you make any rash decisions or sign any severance agreements.

Before a layoff, use any advance notice you get to your benefit. 

Read over your employee handbook, any personnel policies, and any agreements you may have signed to make sure they do not prohibit you from keeping copies of your work or other key employment documents. If not, download files that reflect your own work and experience (nothing confidential or proprietary), and save them to a network or a drive you own and can access after the layoff.

They’ll come in handy if you have to put together a resume or portfolio of your work to share with recruiters or prospective employers, or if you need them as evidence to support a claim. You likely will be shut out of the company’s systems without access to these documents soon. And, depending on where you work, you may not have the right to obtain copies later.

Go to the doctor and dentist

If you have an employment-based insurance plan, your coverage will end on your last day of work or the last day of the month in which you leave your job. Although you may be able to extend coverage through COBRA (more on that later), it’s usually cost prohibitive for most folks. So, before you lose coverage, use this notice period to get that annual physical done, have lab work performed, get your teeth cleaned, and arrange any other medical, dental, or vision appointments.

Spend any remaining funds sitting in your FSA before your official layoff date

Flexible spending accounts (FSAs) are special accounts set up by your employer to let you pay eligible out-of-pocket expenses with pre-tax dollars from your paycheck. Not every employer offers FSAs, but if you have one now is the time to use any of the funds in the account. That’s because what happens to your FSA after a layoff depends on your employment status. Once your employment officially ends, any unspent funds in your FSA go back to your employer unless you continue coverage through COBRA (more on that later).

To strategically use up any FSA funds before you leave your job, you can:

• Complete any lab work or tests you need to get done,
• Refill or stock up on prescription medications, or
• Buy a new pair of prescription sunglasses.

But remember to keep your receipts. You’ll need them to get reimbursed through your FSA. Most plans give you 60-90 days to submit receipts for reimbursement. If you’re not sure how long you have to submit receipts for reimbursement, double check your FSA plan documents for specifics.

The same isn’t true for HSAs. A health savings account, or HSA, is a tax-advantaged account available to workers enrolled in certain high deductible health plans (HDHP). It’s designed to help you cover healthcare costs while building savings for the future. Unlike FSAs, an HSA stays with you for life. Whatever you don’t use just rolls over from one year to the next. So there’s no need to use up any funds sitting in your HSA before your employment ends.

Start or build up your emergency fund.

It’s never too late to start or build up your emergency fund. If you’re still allowed to work and getting paid during the notice period, putting away a little extra each week for the next two months can help you be more prepared. Not sure what more to cut? Consider reducing or pausing retirement contributions, so you maximize immediate cash-on-hand before the layoff takes effect. Stash the extra money away in a high-yield savings account.

What to do during the layoff meeting

Even if you saw it coming, learning that your job was one of the positions cut can be quite unsettling. In that moment, it’s easy to tune out what you’re hearing and not respond. Most people are too angry (rightfully so) or shocked to ask any meaningful questions. But the layoff meeting is your opportunity to ask questions about what comes next: like when you’ll get your final paycheck, whether it will include any earned but unused vacation or PTO, and if you’ll be offered a severance package.

I say if because employers generally aren’t required to offer severance or even pay out PTO and vacation when you’re laid off. Many do, and may even ask you to sign the severance agreement in the meeting itself. Don’t. You’ve just had the rug pulled from under you and aren’t in any position to think clearly, evaluate legal documents, or make long-term decisions on the spot.

Instead, ask for a moment to reflect, review the documents they’ve given you, and then decide what to do next. If they balk at giving you more time to think about it, that’s usually a red flag. By law, you may be entitled to at least 21 calendar days to mull it over before deciding whether to sign it if you’re 40 years of age or older. Even if you’re not, your employer should keep severance offers open long enough for you to retain counsel.

When you’re away from work and have a moment to gather your thoughts, then flip through the agreement. If there’s something in it you don’t quite understand, consider reaching out to an employment lawyer to look over your severance and explain its terms. The best severance lawyers will also be able to spot any red flags and advise whether you should sign it or negotiate for more money or better terms.

What to do after a layoff

File for unemployment

As soon as your employment ends, apply for unemployment benefits. There’s usually a waiting period before your benefits kick in and you start receiving income replacement payments. Submitting the application immediately can help avoid any extended period without pay. This is true even if you think your application will be denied because you accepted the severance package.

In some states, you may be ineligible for unemployment if you received a severance. But not in others. For example, in Texas, you can still get unemployment if you received a severance package but your benefits may be delayed or reduced. It’s wise to check with your state’s unemployment office for specific eligibility rules as they vary from state to state. Need help finding that office? Visit this unemployment office locator and it’ll point you in the right direction.

Thoroughly review and negotiate your severance package

Next, it’s time to return to your severance. You may not want to hire a lawyer to negotiate your severance package. That’s fair. But I recommend consulting with a lawyer before signing any important legal document, including a severance agreement. While no two severance agreements are exactly alike, they all include a General Release and Waiver. That’s the portion of the agreement where you give up your right to sue the company for any and all legal claims you might have against it. Among other things, that may include giving up your right to sue for:

If you’re not careful, you could also be agreeing to restrictions that ordinarily wouldn’t apply to you. Often buried in the fine print of severance agreements are “restrictive covenants.” These are legally-binding promises that limit:

• where and for whom you can work long after you leave the company
• what you can say (and post on social media) about your experience working there
• whether you can reach out to former colleagues, clients or contractors of the company

Where present, such restrictions can make an already arduous job search even more challenging. These restrictions are illegal in some places, but not in others. Even in states, like Texas, where allowed they are highly regulated. Employers have to follow strict rules for them to be enforceable. If these terms appear in your agreement and don’t sit right with you, it’s possible to negotiate them out.

Speaking of negotiation, I’m often asked “should I negotiate my severance agreement”? And to that I say, it depends. If you have a compelling reason for the company to offer your a better deal, go for it. In my experience, the most compelling reasons are those that impact the company’s business, reputation, or its bottom line, like:

• a legitimate legal claim that they’ve discriminated against you, underpaid you, or otherwise broke the law as it relates to you
• a real concern that you might blow the whistle on illegal or unethical conduct you witnessed at work (e.g., fraud, insider trading, etc.)
• a fear that you might go work for a competitor (and take their secrets with you)
• a desire to keep confidential information you know about the company, its leaders, or business practices
• a need for you to help the company get through an audit, a regulatory investigation, or a lawsuit

If you don’t have a compelling reason, negotiating isn’t impossible but it becomes harder. You have to find other areas of leverage that would appeal to your employer and use it to your benefit. A good employment lawyer can help you identify your leverage, properly assess its value, and ensure you leave no extra money or benefits on the table.

Make a plan for health insurance after the layoff

Losing a job in the U.S. often also means losing health insurance too. But it doesn’t have to. If you enrolled in your employer’s health plan, you may keep your insurance for a period of time after the layoff. The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to keep your insurance for up to 18 months or until you find coverage elsewhere, whichever comes first.

I’ll warn you: COBRA continuation coverage is not cheap. That’s because you usually have to pay the full premium plus an administrative fee. During your employment, your job likely covered all or part of the premium and the admin fee. That may not be the case after a layoff. Still, it might make sense for you if you have a chronic illness or ongoing medical needs and want to keep the same doctors.

If so, be sure to check your mail. Soon after your last day at work, you should receive a “COBRA notice” in the mail explaining how and when to opt-in. It’s important to not miss the deadline if you wish to keep the same coverage as your employer may not automatically enroll you. That’s true even if they’ve offered to subsidize the cost as part of your severance.

If COBRA is out of reach, there may be more affordable alternatives available. You may enroll in a relative’s insurance plan through their employer. If you’re 26 years of age or younger, you may still enroll in your parent’s health insurance plan. A spouse may also be able to add you to their employer-provided health plan. Usually, you have to wait for open enrollment to take advantage of these options. But that’s not the case when you’ve been laid off. A layoff counts as a “qualifying life event” that makes you eligible to sign up outside of open enrollment.

Contact your student loan servicer to reduce your monthly payments

If you’re repaying student loans, you may be able to stop or shrink payments until you land back on your feet. The available options will depend on whether your loans are federal or private. Federal loans offer the greatest flexibility. With most federal student loans, you can sign up for an unemployment deferment or income-drive repayment (IDR) plan.

An unemployment deferment allows you to pause your student loan payments for a short period while you’re receiving unemployment and actively searching for a new job. While in deferment, interest may still accrue. If so, the interest will be added to your principal once the deferment ends. So it provides temporary relief, but could mean your overall balance balloons.

Alternatively, if you’re able to still make some payments while laid off then consider enrolling in an IDR plan. These plans cap your monthly payments at a certain percentage of your discretionary income.  This means if your income drops, your monthly payment would too. You can enroll in an IDR plan at any time. Even if you’re already on an IDR plan, you can submit a new IDR application to update your income post-layoff. You might be asked why you’re resubmitting if it hasn’t quite been a year since your last recertification. Be honest and explain that you’ve been laid off and want your servicer to recalculate your payment immediately.

If granted, you’ll be placed in an administrative forbearance during which no payments are due, and then your monthly payments for the next 12 months will be based on your post-layoff income. You do not have to recertify your income if you get a new job before then. This can give you some extra breathing room as you catch up on other bills.

Private loans are less forgiving, and your options will depend on the terms of your loan and lender. Some might offer a hardship forbearance or give you more time to repay the loan. To see what options are available for your private loan, it’s best to contact your lender and ask about deferment or forbearance options.

Start the post-layoff job search

Before you start firing off applications, take a breath and get intentional. Have a clear sense of what you’re looking for in your next role: the type of work, the kind of company, the culture, the compensation range. Applying everywhere and hoping something sticks is exhausting and rarely works. Being selective and strategic almost always yields better results.

When you’re ready to start applying, don’t limit yourself to job boards. Sure, LinkedIn has helped plenty of people land their next role. But some of the best opportunities never get posted publicly at all. They get filled through referrals or word of mouth. Now is a good time to let your network know you’re looking. Former colleagues, managers, mentors, and even acquaintances can open doors you didn’t know existed.

A few other things worth doing during your search:

• Dust off your resume. Update it to reflect your most recent role, and tailor it for the kinds of positions you’re targeting. A generic resume rarely stands out and is likely to fall through the cracks as more companies rely on AI to sift through application materials.
• Refresh your LinkedIn profile. Recruiters use it constantly. Make sure it reflects where you are now and where you want to go next.
• Consider upskilling. If there are gaps between where you are and where you want to be, this is a good time to close them. Local libraries often offer free access to LinkedIn Learning, and platforms like Coursera offer low or no cost certificates in a wide range of fields.

Remember, if your post-layoff job search takes longer than you’d hoped, don’t be too hard on yourself. The job market is genuinely tough right now. Rejection is part of the process.

I know this is a lot. But if you take nothing else from this guide, take this: a layoff is not a reflection of you. It’s not a sign of your personal failure. It is a forced pause that, with the right moves, can become a launching pad for your next chapter. If you need help from an employment lawyer who gets it, reach out to me. I’d love to help.

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