What happens when you lose a job?

By Katie Martens

Abstract: the differences between being fired and being “let go,” making sure your savings can handle an employment loss, and making sure you transfer everything from your old job to your new job (as far as investment accounts go, not your annoying co-worker).

Whether you’ve been fired, or let go, losing a job generates a host of emotions. Probably for many people who did not want to lose their primary source of income, the initial reaction is panic and fear of the unknown. If you’re like me, you might even dwell and marinate in that anxiety for days. Instead of losing ourselves further to the quicksand of emotional turmoil, let me offer you a stick to pull yourself out. A bullet-point stick list, if you will. These questions aren’t going to land you your next job, but it may help quiet the nagging anxiety that comes with not knowing where or if or how you’ll be working next week. Let’s start thinking about these questions:

Were you fired or let go? Try not to attach too much emotional significance to this difference. Instead, think of how it affects your current financial situation. Often the distinction can mean the difference between severance pay, and whether/how much unemployment you can apply for while you search for a new job. It will also likely affect your ability to receive recommendation letters to boost your employability to future employers.

If you are fired, severance pay may be associated with an exchange between the fired employee and the company - the company will give you money as long as you sign a document releasing them from legal liability. If you are told that you’re being fired during a meeting, and you are given documents to sign during that meeting, don’t sign until you’ve had time to review. A better practice may be to ask for 24 hours to review, so that emotions surrounding your firing don’t cloud your reading of the documents. Further, if your company has an employee handbook, consult it again after your termination. There may be guidance in there that the company didn’t bother following itself, that you could use to leverage a better severance package or possibly consult legal counsel if you felt that you were wrongfully terminated. If the firing is unwelcome and unexpected, make a paper trail of your efforts to understand why you were terminated, as it will help in consulting an attorney or in applying for benefits at your state’s unemployment office.

If you are “let go,” oftentimes it means the company can’t afford to keep you on as an employee, and it has nothing to do with your job performance. Growing up, my family lived near a number of newspaper reporters, and we often heard about their job losses over the years. I made the mistake once of asking our neighbor why she got fired, and she said “It wasn’t a firing. I was let go because the newspaper isn’t making enough money.” At the time, the distinction meant nothing to my 14 year old brain, but to her, it was everything. Why? Because being “let go” has nothing to do with my neighbor’s ability to do her job. The newspaper lost revenue, or got restructured, or perhaps even merged with a bigger media conglomerate. If you are “let go,” you will likely receive some sort of severance package, continuing your wages and benefits for a certain number of weeks. In those situations, it’s much easier for a potential employer to understand why you’re no longer employed there.

It is also easier to apply for and receive unemployment benefits from your state if you are “let go.” If you are fired, the unemployment office will usually ask for proof that you were wrongfully fired. Remember earlier in this article when I suggested that if you were fired unexpectedly that you make a paper trail? This is one of those reasons. Send follow up emails with the Human Resources department, or your boss, to make sure you understand why you were fired so that you can take this information to legal counsel or the unemployment office.

Bottom line: if you are fired, keep or begin your paper trail. If you are fired, and relieved, move on to the advice for being “let go.” If you are “let go,” fall into the arms of the network you’ve hopefully developed for yourself. Reach out to everyone, even those you don’t think would have a clue what you do. The more eyes and ears and mouths with your information, the better. If you don’t have a strong network, start building. And if you know of competitors in the business who may benefit from your skill set, reach out.

What will happen to you next week if you don’t have a job, or next month, or in a year? Start analyzing your expenses to see how long you can last without an income. Again, try not to attach any emotion to this analysis. It’ll help you see more clearly what you can eliminate from your budget, and perhaps what you could do to pick up some money while between jobs.

The best time to prepare for a layoff or firing is before it happens. Whether you are still employed or terminated, you can protect yourself from this scenario by reviewing your budget, building an emergency fund, and understanding your company’s deferred compensation rules.

Did you retrieve everything from your old job? In this question, I’m not referring to a Swingline stapler (for those who get the movie reference, fist bump to you), I’m talking about making sure any investment accounts you set up through your employer are transferred, and any benefits you might have been paid, such as paid time off (PTO), are reflected in your last paycheck. Again, this may pop up in the termination/letting you go meeting, and it may not. Either way, make sure you begin documenting everything. Let’s start with wages - refer to your employee handbook, but if you know off-hand, do your own calculation of what your final check should be. Does it include any unused paid time off or vacation days? Some companies allow employees to roll over their vacation hours into the following calendar year, if so, consult the bookkeeping staff to compare with your notes. What about FSA or HSA benefits? Do you need to roll those over into your new employer? Once you get a new employer, you’ll have to make a transfer request to get the FSA or HSA account in your new employer’s name.

Did you have stock options in the company? Was it contingent on employment, and did you trigger whatever conditions the stock option agreement required in order for them to vest in you? You need to consult the agreement or whatever document you signed, and if you have difficulty understanding the terms, consult legal counsel.

Did you have a pension? These are far less common today than they used to be, as 401Ks are much more popular. However, there are some industries, such as the railroad industry, that still provide pensions for their employees.

The big reminder of this last question is to look carefully at anything you’ve saved, monetarily, at your job. Do you have a 401K program at your job, or if you’re at a university or other non-profit, it might be a 403b or 457b plan. A lot depends on what your new employer will offer for employment benefits, but start to map out whether you should roll that 401K into another 401K or if you should roll that money you’ve saved into a Roth IRA, Traditional IRA, or into an investment account with a trusted financial adviser.