If you’ve been laid off from an employer with 100 or more full-time employees, you are eligible for Federal WARN Act pay. An employer must provide written notice to employees 60-days prior to a plant closing or a mass layoff. In other words, the Federal WARN Act pay is equal to 60 days of pay, or two months.
WARN Act stands for Worker Adjustment and Retraining Notification Act. 60 days advance notice provides employees and their families time to transition and find new employment, if desired or necessary.
As I’ve clarified in my severance negotiation book, How To Engineer Your Layoff, do not confuse WARN Act pay with a severance package. WARN Act pay is mandatory by federal law. A severance package is discretionary and on top of WARN Act pay.
When employers announce they will be paying two months of severance pay to laid-off employees, they aren’t doing so out of generosity.They are doing it because if they don’t, they will get in trouble with the law.
See complaints from laid off employees at Twitter and Health IQ, many of whom haven’t gotten paid their severances yet.
No Unemployment Benefits If You Quit Your Job
One of the “great” things about getting laid off from a company with 100 or more people is that you are eligible for WARN Act pay, a severance, and unemployment benefits. If you quit your job, you are ineligible for unemployment benefits. Hence, never quit your job, try to get laid off instead.
During times of extreme economic duress, the Federal government sometimes steps in and offers extended federal unemployment benefits beyond the usual 24-26 weeks of state unemployment benefits. For example, during the global financial crisis, a record 99 weeks of unemployment benefits were offered.
During economic downturns, the value of a severance package becomes even more valuable. In turn, quitting your job with nothing becomes an even more ill-advised move. Because if you quit your job, you get nothing.
For some reason, some people are too prideful to try and get laid off with a severance package. What may assuage these people to get over themselves is knowing that a portion of their paycheck goes towards unemployment insurance.
When To File For Unemployment Benefits After Being Laid Off
One question you might wonder about is when to file for unemployment benefits after being laid off with WARN Act pay.
After you are laid off with WARN Act pay, usually, you are not allowed back in the office. A security guard or HR staff may escort you out after giving you time to pack up your belongings. If you work remotely, your company access usually gets shut down as soon as you receive written notice that you are laid off.
Although you are not able to work for your old employer anymore, you will still get your regular paycheck for the next 60 days. This usually means four more paychecks, if paid bi-weekly.
Some laid-off employees are hesitant to file for unemployment benefits while still receiving their regular salary for the next 60 days. They are confused and wonder if receiving unemployment benefits while receiving WARN Act pay is legal and considered “double dipping.”
As a result, some laid-off employees will wait until their WARN Act pay is exhausted before applying for unemployment benefits. DO NOT DO THIS.
As soon as you are notified your services will no longer be required, immediately apply for unemployment benefits.
Why Apply For Unemployment Benefits Despite Still Receiving WARN Act Pay
First of all, your company laid you off. You are unemployed and are no longer working for the firm despite getting federally mandated WARN Act pay. When you apply for benefits, the state’s unemployment department will often verify your dismissal with your employer before approving UB payments.
Second of all, WARN Act pay only lasts for 60 days. The purpose of WARN Act pay is to buy you time to find another job if needed. The sooner you find another job, the better it usually is for you, your family, and the economy. The longer you are out of a job, the harder it may be to find another similar-paying job.
Third of all, it may take weeks to set up an account and receive your first unemployment benefit. The general timeline is between 1-2 weeks to set up an account and then 1-2 weeks to get your first unemployment check. As a result, you want to protect yourself and prevent avoidable income gaps, especially if your funds are low and have a family to support.
Finally, unemployment benefits are partially paid by you. As I mentioned, part of your salary goes towards paying for unemployment insurance. The longer you work at your company, the more unemployment insurance you’ve paid. However, unemployment benefits are usually capped at 26 weeks without special federal government assistance. Hence, it is your right to get as many unemployment benefits as you can when you need them the most.
You Deserve All The Unemployment And Severance Pay You Can Get
If you didn’t try to get laid off with a severance package, then getting laid off can be an extremely unsettling experience. This is not the time to think about your employer’s financial well-being. This is the time to think about yours until you can get another job.
Absolutely file for unemployment benefits ASAP, despite getting WARN Act pay. The worst case is that you are denied unemployment benefits until your WARN Act pay is over.
There Is No Punishment Applying For Unemployment Benefits
Do not fear getting penalized by the local government or your employer for applying for unemployment benefits while receiving WARN Act pay either.
The local government will not fine you, nor will your old employer write negative remarks on your employment record. You were laid off. The government or your old employer does not want to kick you when you are down.
Be selfish for your own financial well being!
The Best Case Unemployment Scenario
I wrote How To Engineer Your Layoff to help every employee take greater control of their financial future. In our hyper-competitive world, downsizing happens all the time. If you are not prepared for a job loss, you may find yourself in a world of discomfort. Company loyalty is practically dead.
I want to arm all employees with the knowledge and tools necessary to control their own employment destiny. Very few employees are lifers with pensions anymore. The vast majority of us will move on to different employers voluntarily or involuntarily, multiple times in our working careers. Leaving work on your terms also protects your dignity, which can sometimes get shattered during a surprise layoff.
The best case scenario is you want to retire, go back to school, be a stay-at-home parent, or simply take a break before getting laid off. If you plan ahead, you may be able to negotiate a severance package, receive WARN Act pay, and receive the maximum unemployment benefits. A triple win!
With no plans to return to work for a while, getting laid off can be a timely gift!
You Can Earn WARN Act Pay And Keep Your Severance After Finding Another Job
Another best-case layoff scenario is if you find another similar-paying job soon after receiving a severance package and WARN Act pay.
Let’s say you got a severance package equal to 24 weeks of pay plus 9 weeks of WARN Act pay for a total of 33 weeks. You also start getting unemployment benefits three weeks after you apply. On the seventh week, you find a new job with the same pay. Therefore, for 26 weeks, you will essentially DOUBLE your income!
If you find another job a day after getting laid off, you don’t need to give back your severance package and tell your old employer to stop paying you your WARN Act pay. The severance package and WARN Act pay are yours to keep. You deserve them because your employer laid you off. The last thing an employer wants is conflict with a disgruntled employee.
The only financial income you will stop receiving is unemployment benefits because you must notify the unemployment department during your bi-weekly check-ins online that you have found a job. Hence, if you want to maximize your unemployment benefits and take more time off, negotiate with your new employer a later start date.
Getting Laid Off Could Be The Best Thing For You
The more you plan for a layoff, the better you will be financially and mentally if and when it happens. Even if you got laid off unintentionally, there are a lot of upsides to being forced into a new situation.
Deep down, many employees are just not into their jobs. They wonder whether this is what they want to do for the rest of their one-and-only lives. Getting laid off could be the perfect catalyst to change your life for the better!
The thing is, you never want to just quit your job to do something else. If you do, you will get zero financial compensation. Instead, you want to be highly strategic with your departure by planning as far ahead as possible.
I engineered my layoff in 2012 because I was no longer interested in working in finance after 13 years. The job got mundane and I was no longer being paid commensurately with my performance. So I found a way to negotiate a severance package and break free from the work grind.
Getting laid off with a severance package was a blessing. It gave me the financial runway to travel, pursue my entrepreneurial interests, and start a family.
I hope all of you will one day get laid off with a severance package as well.
Reader Questions And Suggestions
Why do you think some employees are so fearful or prideful of applying for unemployment benefits? Is it similar to Stockholm syndrome, where the captive creates a bond with their captor? Please forward this post to friends or loved ones who have been laid off and find themselves in this dilemma.
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