The Employment Clinic
You’ve been fired, what do you do next?
By Lawrence D. Alter
Do nothing at alluntil you have had a chance to assemble your mental resources, consider how the termination was handled, and review the separation package. Familiarize yourself with any published company policy regarding compensation, severance, and termination procedures. Be aware that there are exceptions to every rule and you may have an excellent chance of impacting the “standard” termination package through appropriate bargaining techniques.
Know your legal rights. You need to recognize when you have been illegally terminated. Following are a few of the reasons that your termination may not have been legal.
- The Consumer Credit Protection Act of 1973forbids an employer from terminating an employee whose wages have been subject to a wage garnishment resulting from a single debt.
- The Employee Retirement Income Security Act of 1974 (ERISA)prohibits the firing of any worker who is therefore prevented from achieving immediate vested pension rights or who was exercising their rights under ERISA and was fired as a result.
- The National Labor Relations Act prohibits the firing of any employee because they were involved in union activity. The law also protects those employees who band together to lodge a protest about working conditions or compensation.
- The Jury System Improvements Act of 1978forbids employers from terminating an employee who must serve on a federal grand jury. Most states have enacted similar laws for citizens performing local jury duty.
- The Age Discrimination in Employment Act protects workers over the age of 40 from being unfairly terminated.
- Your termination should be questioned if you feel you were fired based on gender, ethnicity, religious faith, or because you are a member of any other minority group.
- Your termination may be suspicious if you were about to receive a large commission or vested stock option rights, if you were terminated after a safety violation, or fired after returning from a pregnancy or illness.
Seek the advice of an attorneyif you feel that you were treated unfairly, discriminated against, or for any other reason believe you may have the basis for legal action.
Then meet with your managerin an attempt to negotiate a severance package if one was not offered, or improve a severance program that was offered. Consider the following factors:
- A letter of agreement, or statement holding the employer harmless and immune from litigation, may be a requirement in order for you to receive any severance package. Make sure you get legal advice before signing any legally binding document.
- Nondisclosure or noncompete agreementsare often included in a document you must sign in order to receive your severance package. Many noncompetes are not legally binding, and no employer may keep you from performing your livelihood.
- Severance pay. Employers will often pay one or two weeks of severance for each year of employment. However, there is no legal requirement for any employer to pay severance unless required by a collective bargaining agreement or an employment contract. You may be able to impact the amount of severance through effective negotiation. Avoid a severance agreement that terminates if you accept employment before all separation funds have been paid.
- Vacation Pay. Request any earned but unused vacation time regardless of company policy. Earned vacation time should be paid in addition to severance.
- Bonus/commissions. If you have earned a bonus payable at year’s end, ask for it to be paid immediately, or if necessary, prorated based on time worked. If commissions are earned and due, or about to become due, insist that you be paid immediately.
- Insurance Continuation. If you have been covered under a group health insurance program, you are entitled to as much as an 18-month extension through COBRAprotection. This enables you to maintain your medical coverage at a far lower cost than purchasing insurance on your own. You may also request that the company continue to pay the cost of medical coverage for a specified period of time.
- Outplacement Assistance. Many employers will offer outplacement assistance as a part of the separation package. Outplacement companies provide transition and emotional support services to assist in the job search process. Often this support will be provided only if you ask for it.
- Stock options. You may be able to negotiate the period of time during which you have the right to exercise both vested and unvested stock options before losing them.
- Pension eligibility. If you are vested, and within a few years of being eligible for your pension, you may ask the company to “bridge” you until your date of eligibility. This does not violate the federal Employee Retirement Income Security Act (ERISA).
- Interim Consulting. Ask your employer if they can use you as an Independent Consultant to finish an important project or do other work. This may be attractive because they do not provide benefits or pay FICA taxes. Consulting provides an “income bridge,” while you continue to look for new employment.
Don’t forget to file for unemployment compensation. Whether or not you think you are eligible, file immediately. Let the unemployment office determine your eligibility.
Finally, take a few days for recovery and self-assessment. Make a list of your professional strengths, business achievements, areas for self-improvement, and your transferable skills. Get your references in order.
“Author Lawrence Alter is president of L.D.A. Enterprises, Ltd.; a Minneapolis based outplacement and career management firm. He is a recognized expert in career growth techniques. Send ideas or questions via email to: LDA@EmploymentClinic.com. Website address: www.EmploymentClinic.com”