To prepare for a layoff meeting, pull together your compensation and benefits records, quietly save personal files while you still have system access, walk in with a written list of questions about final pay and health coverage, and refuse to sign any separation agreement in the room. The meeting usually runs 15 to 30 minutes. The decisions it triggers can shape your finances for months, and most of them get easier when you have the paperwork in front of you.
Pull Your Compensation and Benefits Records First
Log into your payroll portal and save recent pay stubs showing gross salary, tax withholdings, and benefit deductions. Note any outstanding bonuses, commissions, or incentive pay you’re owed. These become your reference point if the employer’s final accounting doesn’t match.
Check your accrued but unused vacation and PTO balance. Federal law does not require employers to pay out unused vacation, but many state laws and company policies do.1U.S. Department of Labor. Vacation Leave Look up the policy in your employee handbook so you know what to expect on the final check.
Review your 401(k) or pension vesting schedule. If you’re close to a vesting cliff, even a few weeks can decide whether you keep employer contributions or forfeit them. Note details on life insurance, disability coverage, and any other benefits tied to employment. Keep all of this on a personal device or on paper so you don’t lose access the moment company accounts shut off.
Save Personal Files Before Access Is Cut
Corporate IT often revokes email and system access within minutes of the meeting. The days beforehand are your window.
Download the last two years of W-2 forms and recent pay statements to personal storage. You’ll want them for tax filings, mortgage applications, and income verification on future job applications. Export personal contacts, mentors’ phone numbers and personal email addresses, non-proprietary work samples, and any performance reviews you’ve received.
Draw a clear line between personal records and company property. Copying proprietary data, client lists, or trade secrets can expose you to legal liability. Stick to documents about you, created by you for professional development, or personal files that ended up on a work device. Wipe personal browsing history from company hardware before you return it, and take home personal belongings from your workspace over the days leading up to the meeting.
Questions to Ask in the Meeting
Bring a written list. The conversation will move fast, and these are the answers you need:
- When will the final paycheck be issued, how will it be delivered, and will accrued vacation be included? State laws set different deadlines for final pay after an involuntary termination, ranging from the same day to the next regular payday.
- Exactly when does employer-sponsored health coverage end? Some companies extend it through the end of the month; others cut it on your last day. The answer drives your COBRA and Marketplace deadlines.
- What are the severance terms in writing? Total amount, lump sum or installments, duration, and whether the company will subsidize health insurance during that period.
- What is the company’s reference policy? Some employers only verify dates and title; others allow managers to give substantive references. Get it in writing if you can.
- How long do you have to review and sign any separation agreement? Do not sign anything in the room.
- Who is your HR contact for follow-up on tax forms, benefits paperwork, and COBRA? Get a name, phone number, and email.
Don’t Sign the Separation Agreement in the Room
Most layoffs come with a separation agreement. In exchange for severance, the company typically asks you to waive your right to sue. This is where the real negotiation happens.
How Long You Have to Sign
If you’re 40 or older, the Older Workers Benefit Protection Act requires the employer to give you at least 21 days to consider an individual separation agreement, or 45 days if the layoff is part of a group termination or exit incentive program.2Office of the Law Revision Counsel. 29 U.S. Code 626 – Recordkeeping, Investigation, and Enforcement After you sign, you have 7 days to revoke, and the agreement doesn’t take effect until that revocation window expires.3U.S. Equal Employment Opportunity Commission. Q&A – Understanding Waivers of Discrimination Claims in Employee Severance Agreements The agreement must advise you in writing to consult an attorney, and the severance has to be something beyond what you’re already entitled to.
Even if you’re under 40, there’s no reason to sign the same day. An employer pressuring you to sign immediately is a red flag.
What You Can Try to Negotiate
- Additional severance weeks, especially with long tenure or an initial offer below the company’s own formula.
- Continued employer contribution to health premiums for a set period rather than an immediate jump to full-cost COBRA.
- Outplacement services such as career coaching, resume help, and job placement assistance.
- Narrower non-compete scope or shorter duration. A federal rule that would have banned most non-competes was blocked by a court order in 2024, and the FTC has since moved to dismiss its appeal, so these clauses remain enforceable under state law in most places.4Federal Trade Commission. Noncompete Rule
- Agreed neutral reference language stating exactly what the company will say to future employers.
An employment attorney can review the agreement for a flat fee and often finds issues that justify the cost, especially when the package is substantial or a non-compete would limit your job search.
Check Whether the WARN Act Applied
The federal Worker Adjustment and Retraining Notification Act requires employers with 100 or more employees to give 60 days’ written notice before a mass layoff or plant closing.5Office of the Law Revision Counsel. 29 U.S. Code 2102 – Notice Required Before Plant Closings and Mass Layoffs A mass layoff generally means 50 or more workers losing their jobs at a single site when that represents at least a third of the workforce, or 500 or more workers regardless of percentage.
If your employer skipped this notice or gave less than 60 days, you may be entitled to back pay and benefits for each day of the shortfall, up to 60 days.6Office of the Law Revision Counsel. 29 U.S. Code 2104 – Administration and Enforcement of Requirements Many states have their own versions with lower thresholds or longer notice periods. If you suspect a violation, that’s another reason to have an attorney look at the agreement before you sign a general release of claims.
Plan Your Health Insurance Before Coverage Ends
Losing employer coverage is one of the most immediate financial risks of a layoff. You have two main paths.
COBRA Continuation
You can continue your existing employer plan for up to 18 months. You pay up to 102% of the total plan premium, which includes what the employer used to cover plus a 2% administrative fee.7U.S. Department of Labor. An Employers Guide to Group Health Continuation Coverage Under COBRA For most people that means $600 to $900 or more a month for individual coverage, since employers typically pay 70% to 80% while you’re working.
You have at least 60 days from the date you receive the COBRA election notice or the date coverage ends, whichever is later, to decide.8GovInfo. 29 U.S. Code 1165 – Election COBRA is retroactive: if you elect within the window, coverage applies back to the day it lapsed. Some people use this as a safety net, waiting to see if they need care and electing only if they do.
Marketplace Coverage
Losing job-based coverage triggers a Special Enrollment Period on the Health Insurance Marketplace. You can report the loss up to 60 days before or 60 days after coverage ends.9HealthCare.gov. Special Enrollment Periods Marketplace plans often cost significantly less than COBRA, especially if reduced income qualifies you for premium tax credits. Compare both before defaulting to COBRA.
FSA and HSA
Use any Flexible Spending Account balance before your last day. FSA funds operate under a use-or-lose rule, and money left in the account after coverage ends is typically forfeited. Submit claims for expenses you’ve already incurred, fill prescriptions, and schedule the appointments you’ve been putting off.
Health Savings Account funds are different. HSA money is yours permanently, stays in the account after you leave, and continues to be usable tax-free for qualified medical expenses. If the HSA sat inside your employer’s benefits platform, consider transferring it to a personal HSA provider.
Handle the Money That Comes After
How Severance Is Taxed
Severance is taxable income, and the withholding surprises people. The IRS treats it as supplemental wages, so your employer withholds federal income tax at a flat 22% on amounts up to $1 million, and 37% on anything above that.10Internal Revenue Service. Publication 15 (2026), (Circular E), Employers Tax Guide Severance is also subject to Social Security tax (6.2% on earnings up to $184,500 in 2026) and Medicare tax (1.45% on all earnings).11Social Security Administration. Social Security Tax Limits on Your Earnings The Supreme Court confirmed in 2014 that severance payments are wages subject to FICA regardless of the circumstances of the termination.
Practically, a $20,000 lump-sum severance might net around $14,000 after federal withholding and payroll taxes. Installments spread across calendar years might keep you in a lower tax bracket; a lump sum hits taxable income all at once. Either way, budget for the gap between gross and net.
401(k) Decisions
Your 401(k) balance doesn’t disappear. You can leave it with the former employer’s plan, roll it into an IRA, or roll it into a new employer’s plan once you have one. Taking a cash distribution triggers income tax on the full amount plus a 10% early withdrawal penalty if you’re under 59½.
A direct rollover moves the money without touching your hands and without withholding. If the plan sends you a check instead, you have 60 days to deposit it into an eligible retirement account to avoid taxes and penalties.12Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans
Outstanding 401(k) loans are the trap most people miss. If you leave with an unpaid loan balance, the plan will typically offset the remaining amount from your account. You then have until the due date of your federal tax return, including extensions, for the year the offset occurs to roll that amount into an IRA. Miss that deadline and the offset is treated as a taxable distribution.13Internal Revenue Service. Retirement Topics – Plan Loans
Unemployment Benefits
File with your state’s workforce agency as soon as possible after the layoff. Most states let you apply online; the application asks for reason for separation, recent earnings history, and former employer information. Delay only pushes back your first payment.
Most states impose a one-week waiting period. Maximum weekly benefits vary widely, from roughly $235 to over $1,100 per week. Processing and employer verification typically runs two to four weeks.
Severance can delay or reduce unemployment depending on the state. If severance is paid as salary continuation, some states won’t start benefits until those payments end. A lump sum is treated differently in most states, sometimes reducing benefits only for the week the payment lands. How severance is structured matters here. Ask your state agency before you assume the money will stack.
The Department of Labor’s Employee Benefits Security Administration handles questions about federal benefit rights during the transition.14U.S. Department of Labor. Employee Benefits Security Administration Keep records of every filing date, confirmation number, and piece of correspondence with the former employer and the unemployment office. Those details matter if anything gets disputed.