Laid Off? What To Do Before Plunging Into The Job Search
[Editor's note: If you recently lost your job, take a look at Wise Bread's collection of tips and resources for the recently laid off.]
Your company has announced a soon-to-come layoff or you’ve been escorted out of the door. What’s next? What should you do…before updating your résumé, tapping into your professional network, and looking for a job? (Those of you who are considering career changes may also find this guide useful).
Review your financial status, especially now that it is changing.
Calculate how much money you’ll need to meet your obligations and how many months you’ll have before your personal financial situation moves from good to bearable to desperate.
Evaluate your severance package and consider your options, which may involve a lump-sum payment or salary continuation. (See New York Life’s What Do I Need to Know About Severance Packages? and About.com's article on the Severance Package.)
If you are offered consideration (aka extra cash or some other benefit) for signing a non-compete agreement, think about the implications for locating a new job. (For example, I know someone who lost his job following a company downturn but couldn’t leverage his industry expertise because of a non-compete agreement; he didn’t have a college degree and was unable to relocate because of child custody issues, adding to the job-search and financial distress). If you signed a non-compete upon your hire or for consideration after being hired, see if you can get a clear definition of what companies or industries are considered competitors, or if the agreement is enforceable in your state.
Look at your benefits package: your life, health, and disability insurance coverage as well as your retirement plans.
When will your benefits end? Do you need to replace your insurance coverage?
If you are eligible for COBRA (Consolidated Omnibus Budget Reconciliation Act), do you know its monthly cost? (more on COBRA and rights associated with HIPAA). Davis Liu, M.D., author of Stay Healthy, Live Longer, Spend Wisely mentions www.ehealthinsurance.com as a resource for investigating short-term and/or high deductible health insurance. (Disclosure: I received this book in exchange for a book review; more info to follow in a separate post).
Analyze your 401(k) plan options and obligations. Do you have a loan associated with the 401(k) and will you need to pay that off immediately? Should you leave the 401(k) with your employer’s administrator while you decide where to transfer the funds? Do you need to transfer the assets immediately upon your separation from the company? (See 401(k) Help Center)
Learn the rules of unemployment insurance. See if and when you are eligible for benefits (you should be eligible unless you were terminated for cause) and what the requirements are to receive payments. If you have been displaced as a result of increase in imports or offshore business, look into Trade Adjustment Assistance: here are some details about the Trade Act.
Set your professional and personal priorities. Will you live in the same town or will you relocate? Are you looking for a similar job in the same industry? Do you want to take a step forward and advance in responsibility or do you want to move laterally, or take a step back in order to spend more time with your family or developing a business idea?
Investigate a new career (if that’s what you want) and determine the time and resources it might take.
You might decide to become a nurse and you already know, for example, that an RN license may take 2 years to earn. But do you know when you’d actually be able to start classes? Do you know if you’d be accepted immediately into a program or will it take a several months?
Or, you’ve thought you might work as a teacher by getting credentials through an abbreviated training program (less than the traditional 4 years it usually takes to earn an education degree). Do you qualify? (I know someone who found several weeks into his discussions with an administrator that his GPA from his bachelor’s degree—earned over 20 years prior—was too low to enter the program).
Get a handle on the nuances and the time frame for earning credentials and landing a job.
Check salary.com or payscale.com (or do your independent research) to see if your professional goals, personal desires, and financial needs are synchronized with your expected compensation. Decide whether you’ll relocate, sell the house, stay in your industry, or take an interim job while you go back to school.
Why pause before making the job-search plunge? If you take a breath and do some financial assessments, you’ll be more focused and more likely to get what you really want.
Note that many topics I’ve mentioned may be governed by state laws such as the enforceability of non-compete agreements, pre-existing condition exemptions for health insurance, and availability of specialized teacher-training programs so talk to an expert in your area.