Chances are that you or someone you know has experienced a layoff at some point. No matter how stable and safe your career might seem, getting the so-called pink slip can happen to anyone. Indeed, the 2020 economic crisis and lockdown has been the epitome of unexpected. Nearly 21 million people were unemployed in May 2020 and 17.7 in June (compared to 3.7 million in June 2019), according to the Bureau of Labor statistics.
No one knows yet when the economy will be significantly restarted, but it eventually will return, and people will go back to work. If you were caught unprepared for unemployment, it would be wise to use this time to think about how you can be ready for it in the future. Here are seven steps to take to do just that.
- Never assume that your job is secure and you don’t have to prepare for being unemployed.
- Keep your résumé up to date even while employed.
- Maintain an emergency fund of between three and six months’ worth of living expenses.
1. Keep Your Résumé Up to Date
If you are busy with work, it is easy just to file away your résumé and forget it even exists for years at a time. Why would you search for a new job if your current position is fulfilling, lucrative, and stable? The answer is that you never know what is around the corner, and it’s always better to be prepared, just in case. So no matter what your job situation is, keep your résumé up to date and your eye on new opportunities. It never hurts to look, and it will help ease your stress if you do get laid off.
2. Start an Emergency Fund
Whether you are just starting out in your career or a seasoned veteran, it’s smart to have a just-in-case emergency fund. Ideally, financial planners recommend having three to six months’ worth of monthly living expenses in it. However, the goal is to set aside as much as is feasibly possible. And whatever you do with your other money, keep that particular fund in a very secure and liquid place where you can easily and quickly access it. Don't put it in a long-term CD where you'll incur penalties if you remove it prematurely—or use it to buy a stock you think will appreciate fast.
3. Read the Fine Print
If you do have that talk with your boss or human resources, make sure you request and read all the contracts and employee documents you signed when you were hired, as well as any documents or company policies that went into effect after you were hired. Make sure you are being paid for any benefits accrued, unused vacation days, or money owed (for example, if your contract states that the company pays you a certain amount for each project completed).
Also, check on your ability to apply for COBRA health benefits or unemployment benefits. You don't want to miss anything that you may be entitled to receive.
Find out what your company policy is for severance packages. If possible, see if you can also find out what other people who have been laid off have gotten. Do not be afraid to sit down and negotiate some sort of severance package. If your company is folding due to financial issues, that might not be possible. Chances are, though, if you bring your negotiating skills to the table, you could walk away with a little bit of a cushion to help you through the next few months. It never hurts to ask, and should at least try. Some items to negotiate for: extra severance, health insurance coverage, outplacement assistance.
If you're well past entry level in your job—or think you may be experiencing illegal job discrimination—consider consulting an employment attorney before you sign any documents relating to your severance. In fact, the name of a good lawyer who specializes in employment issues is another thing to have in your files just in case.
Know that you only have 60 days to file a job discrimination claim with the Equal Employment Opportunity Commission. Reasons to file such a charge, according to the EEOC website: believing "that you have been discriminated against at work because of your race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information." You can also file with your state; the EEOC website can link you to the correct office.
Networking is something you should always be doing, whether employed or not.
Like keeping your résumé current and staying on top of new opportunities, networking is something you should be doing whether you are gainfully employed or newly laid off. Invite contacts to coffee or lunch, attend events and meet new people, and make sure you are keeping your name out there. You never know what opportunities could come out of a conversation you have at an event. As the saying goes, it’s not what you know, it’s whom you know. Continuing to network will give you a leg up if you find yourself laid off and looking for work.
6. Don’t Panic
Losing your job can be a traumatic experience. Your financial stability is in question, your future is unknown, and searching for a new job might seem daunting. One of the most important things to remember when you are newly laid off is to take deep breaths, don’t panic, and remember that it will get better. Set up a schedule for yourself so you don’t feel adrift during the day, stay busy applying for jobs and networking, and take some time out to remind yourself that as long as you are looking for work, something will come along.
7. Take Stock
A layoff is a great excuse to take stock of your life and choices and reassess your career. Have you always wanted to live in a different city? Now you’re free to look for work there. Have you been dreaming of a career switch for years? Pursue that. Is becoming an entrepreneur your life’s mission, but you haven’t been able to make it happen because your job kept you so busy? Now is the time to take a good, hard look at your life and go after what you really want. The results can be better than you imagined.
The Bottom Line
Being laid off from your job is one of life's major high-stress events, but there are steps you can take to make the transition a little less rocky. Make sure you have some savings, keep your résumé up to date, reach out to your contacts, and negotiate severance pay if possible. Remember that a layoff is a great excuse to take stock of your life and go after what you’re most passionate about.