Sunday, June 08, 2008
CNN "Your Money" covers severance pay and layoffs
Today (June 8) CNN "Your Money" (with Ali Velshi) covered the subject of job layoffs in the current stagflating economy.
Of particular attention was corporate practice with severance pay. There is no automatic right to severance pay. But many larger employers have specific policies regarding how much is offered (relative to years of service and employee grade). Sometimes employees over 55 or some other age get supplementary severance. In almost all cases, to get full severance departing employees will have to sign agreements (often called “release of all claims” or something comparable) agreeing not to sue. They may have to sign additional non-compete agreements not to work for competitors during specified times. Frequently, severance will be paid out equal to salary until it ends, and health benefits can be continued while they are paid. It pays to ask for any retention bonuses that had been promised earlier.
There can be other considerations. Sometimes employers may have published policies agreeing to advance notice of layoff. If these are not followed, it might be possible to ask to add on to severance.
Mergers or buyouts may affect severance, but often merger terms require the acquiring company to honor the original severance policies of the acquired company.
It may pay to check the job boards of the acquiring company of you work for a company that is being acquired. Sometimes companies doing acquisitions do like to see employees show interest in the new company and persist aggressively about new opportunities. A willingness to relocate, travel or telecommute may be welcome. Sometimes acquiring companies, despite the economics, will pay all interviewing expenses for employees of the companies being acquired.
For employees over a certain age, it is sometimes possible to start early retirement (if the company still has a defined benefit pension program) and collect severance simultaneously, which could actually mean increased income for a while after the layoff, ironically. This would pay off if the employee did get a comparable new job, or started a successful business or somehow took advantage of the period.
State laws may vary as to whether you can collect unemployment while receiving severance. Sometimes it cannot start until severance has ended. States have maximum benefit amounts based on what was being made, and maximum periods of draw. However, lack of severance will not affect unemployment (other than making it possible to draw it earlier).
It's likely that Congress will encounter political pressure to extend unemployment benefits, which happened in 2001 after 9/11.
If you are 62 or over, you can also consider starting social security payments, subject to work-related earnings annual limits until reaching full retirement age. If payments are started earlier, the lifetime monthly payment amount will be less.
Update: June 9: Man blogs his layoff experience step by step
CNN also offers a video of the story of Ryan Kudor, who blogged (on mobile devices) his experience step-by-step of getting laid off from Yahoo! in February (the conference room was called "Lucy") and attracted huge readership during the event. As a result, he had two other job offers almost immediately, but reportedly he decided to go into his own business. Here is the video link.