employment

What to Do with Your 401k After You Leave a Job

Getty Images/Maria Stavreva

Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.

Keep readingShow less
401(k)
PayPath
Follow Us on

How to Make Sure You Get the Severance Package You Deserve

If you're one of the 800 million employees who can expect to have their jobs taken over by robots by 2030, now might be a good time to look over those company policies regarding severance. There might be protections in place that will keep you from moving into the poor house even if you do find yourself out on the curb.

What Is Severance?

Severance is an employee benefit paid to workers who are laid off or terminated for matters unrelated to their job performance. Is your department being eliminated? You might get a severance package. Fired because you stole from the company? Or quitting to live your dream of #vanlife? Sorry, severance is likely not in the cards.

Who Gets It?

In general, companies aren't required to provide severance packages, and most employees do not have a legal right to a severance package when their employment ends. When companies do offer severance packages, it's not just to be nice. Severance agreements can help reduce an employer's legal liability, and as such, many companies will offer severance packages regardless of whether they are required to do so. Check your company's policy or the employee handbook to find out what's on offer.

When to Negotiate

There are two good opportunities to negotiate a severance package, Jaime Klein, founder, and president of Inspire HR, told Refinery29: At the beginning of the road, when you're hired, and at the end.

Bringing up severance during the hiring process is a little like asking someone to sign a prenup; it's a delicate subject at best. These days, though, with so many industries on shaky ground, Klein says it's usually okay to ask once an offer has been extended. After the layoff, remember to be polite and have a rationale for your negotiation request.

Remember: If your workplace is unionized, you will likely be able to negotiate better severance policies, and your right to do so is legally protected.

What Can You Expect in a Severance Package?

Severance packages usually include some form of payment based on length of employment, typically one to two weeks for each year you were with the company. It's given as a lump sum or paid over a number of weeks or months. Your severance agreement should also include any accrued but unpaid PTO or vacation pay.

Under the Consolidated Omnibus Budget Reconciliation Act of 1995 (COBRA), a terminated employee is entitled to continue medical/health coverage under the company's plans for up to 18 months after termination (or up to 29 months if the employee is disabled). These premium payments are your responsibility (Sound no bueno? See "What Else Can You Ask For?" below.).

You might be asked to sign a non-disclosure agreement (NDA) as a requirement to benefits like severance pay and COBRA. More on that below.

What Else Can You Ask For?

The agreement isn't cut and dry, notes Richard Harruch on Forbes, and there are a number of things you can ask for:

Can you get the severance in one all-cash lump sum upfront, instead of spreading it out over time?

Can the severance pay also include any partially or fully accrued but unpaid bonus?

If the severance pay is the continued salary for some period of time, does the continuation pay continue even if the employee gets a new job?

Can your employer cover the COBRA payments for anywhere from 6-18 months?

If your termination is a result of a "change in control" of the company (like a merger or other acquisition), you might successfully argue that the severance pay should be greater. But be aware that such change in control payments could rack up a 20% excise tax on the employee.

Go over any non-compete clauses of your severance or hiring package with special attention to geography, scope of the agreement, and duration. Many employers will be open to narrowing the scope of this after a layoff.

That NDA you had to sign? They might make it a two-way street, suggests Harruch. Language that some employers have approved is: "The Company shall not authorize and shall take reasonable measures to prevent its present or former officers or directors from making derogatory or disparaging statements regarding Employee to any third party."

You might go one step farther than including language that bars the company from speaking ill of you and require that a section of the severance agreement include language that requires your positive recommendation. For example, "company acknowledges and agrees that Employee has performed admirably in his/her work with the Company and Company will provide positive recommendations to any interested new employers of Employee." Or, you ask for glowing recommendation letters from supervisors and have the company provide those letters to any prospective new employer.

Know Your Rights

If your company has more than 100 employees and plans to lay off a lot of people, your employer is required to give you 60 days notice of a company closing or a large departmental closing. If they don't, you are legally entitled to severance pay, thanks to the W.A.R.N. Act (Worker Adjustment and Training Notification).

If you are over 40 years old and the company offers you a severance package, the company must give you at least 21 days to consider it and 7 days to revoke after you sign the package, thanks to age discrimination laws.

Some states, like California, have more protections in place for workers whose employment ends without cause. In other places, such as New York, employment is "at-will," and either employer or employee can end a working relationship for any reason. Wherever you live, research and familiarize yourself.

Look to the future

Getting laid off is like a breakup you didn't see coming. It's disorienting, can ruin your sense of self, and rock your most basic sense of security. It's also part of life and something you will survive.

"Getting reorganized, laid off, restructured happens to nearly everyone," Klein said, and it's rarely personal. "Unfortunately, companies have very little loyalty to employees anymore."

Once you've picked yourself up and dusted yourself off — and yeah, you might need to cry and sulk, just like your last broken heart — get back to work. Your job now is finding a new job, and often a former employer will offer outplacement services to help you spiff up your letters and resume. Even if they don't, work your network and keep your head high. You've gotten a job before, and you can do it again.

Related Articles Around the Web
severance

How to Nail Your Exit Interview

If you've ever quit a job before, you're probably already familiar with an often uncomfortable and overlooked aspect of employment: the exit interview. But what you might not realize is that an exit interview can be just as important as a job interview. Not only do you want to leave your place of employment with a good reputation for the purpose of references, but in case you want to come back some day.

Here are our top tips for nailing your exit interview.

1. Don't Think It Doesn't Matter

While you may be tempted to air all your grievances and get your complaints out in the open, in most cases, this isn't a good idea. Not only is it unlikely to actually incite change, it's a surefire way to get yourself written off by the company. There's nothing wrong with calmly and respectfully telling the HR representative you're likely to talk to that you have issues with the company, but make sure you don't cause a scene, no matter how much you may feel like it.

2. Prepare Ahead of Time

Don't go into an exit interview assuming that you'll just come up with what to say on the spot. While you may not know exactly what they're going to ask you, you can be sure they're going to ask you what you liked about the job and what you didn't like about the job. Make sure you have a clear and concise list of the pros and cons of your former position, a few ideas about how you would improve your position, and a few ideas about what you wouldn't change. Try to project the kind of poised and positive attitude you would want to project in a job interview.

3. Focus on the Relationships You Built at the Company

This doesn't only apply to the exit interview itself, but also to all of your behavior as you prepare to leave your job. Write notes to all your colleagues that you connected with, thanking them for their help and support. Try to compliment a specific talent you think each person has. These kind of small gestures may seem like no big deal, but they go a long way to ensuring you preserve the relationships you built at the company — relationships that may open doors for you later in life.

4. Focus on the Positives

If you begin the interview by first telling the HR rep what you loved about your job, they're more likely to see you as a level headed, neutral person when you tell them the things you didn't like about your job. Plus, focusing on the positives is a much better way to ensure you leave the company on a good note.

Most importantly, keep in mind that an exit interview isn't an ending, its a new beginning that could have a big impact on your career in the future.

Related Articles Around the Web
exit interviews

What to Look for in an Internship

Even though we're led to believe that internships are the key to successful careers, we're also wary of companies that take advantage of the free labor, relegating interns to coffee runs or leftover tasks that don't enhance professional development. Students, new graduates, or even professionals looking to change careers and gain experience in an unfamiliar field can avoid being taken advantage of if they know their rights under the Fair Labor Standards Act (FLSA). For example, unpaid internships are legal under federal law, but only if it meets specific criteria, and too often companies play fast and loose with the details of an internship in attempts to qualify. Here's the best advice from employers and labor activists about what to look for in a company's internship program.

1. Be clear if the position is paid or unpaid

The FLSA requires employers to pay employees for their work, but what defines an "employee" from an "intern?" Officially, courts impose the "primary beneficiary test," which is a loose set of criteria that only defines the difference in terms of how the employer and the intern understand the position. Namely, if the internship provides more benefits to the employer in terms of labor, cost, and company services, then the intern must be regarded as an employee. Conversely, if the position provides professional training comparable to an educational environment, enhances (rather than inhibits) the intern's coursework, and both the employer and intern clearly understand that no paid job is promised at the end of the program, then (and only then) is it legal to not pay an intern. Additionally, if the company is a non-profit, then they're granted an exception and may count unpaid interns as volunteers

2. Look for positions relevant to your field

The point of an internship is to gain professional experience and training. Look for opportunities that have built-in support systems to provide hands-on experience in the field of your choice. Be clear about what duties will be expected of you in the position.

3. Ask about mentors

In addition to gaining experience, the goals of an internship include meeting mentors who are invested in your progress. Particularly strong programs allow interns to access higher level executives. This will not only help you network in your professional future, it will enhance your understanding of the field.

4. Be aware of time commitment and living costs

Since unpaid internships can't guarantee a paid position at the end of the program, pay attention to how long the internship lasts and if the time investment will be worth it. Be careful to consider if your lifestyle can be maintained for that duration of time. Even if the position is a paid opportunity of your dreams, like the Disney College Program, be clear if the internship is limited to one-semester or longer. For example, the Disney internship is only available to enrolled students, lasts one-semester, and requires an application fee as well as a housing fee.

5. Relocation

The last point is especially crucial if an internship requires relocation. Ideal opportunities are worth the sacrifices of time and even creature comforts, but they need to be feasible. If you're required to relocate, don't jump to apply unless you're reasonably certain you have the means and willingness to change your environment. Does the internship offer housing? Is there's a fee, how much is it? Does the program compensate transportation costs? Be certain you know the answers before you apply.

Internships are strong enhancements on resumes and can introduce you to a network of professionals to begin your new career. However, legalities and logistics are vital to work out before you apply to a program that could take advantage of your time, energy, and skills.

Related Articles Around the Web
internship