What to Do If You’ve Been Laid Off

What to Do If You’ve Been Laid Off

Being laid off—whether expected or sudden—can be a deeply unsettling experience. Beyond the immediate emotional impact, there are practical concerns: income, health insurance, legal rights, and your professional future. The good news is that you have options—and taking the right steps early can help you recover faster, protect your rights, and regain control over your next chapter.

Here’s what to do if you’ve been laid off.

1. Clarify the Terms of the Layoff

Before you leave the premises or log off your work account, make sure you fully understand:

  • Why you were laid off

  • Whether it’s a temporary layoff, permanent reduction, or position elimination

  • The effective date of your termination

  • If you’re eligible for rehire

  • Whether others in your department were also let go (this could matter in cases of discrimination)

Request this information in writing if it’s not already provided.

2. Request a Separation or Termination Letter

A formal separation letter outlines:

  • Your final date of employment

  • Severance terms (if any)

  • COBRA or benefits information

  • Details about unused PTO or vacation payout

  • Reason for termination (company downsizing, reorganization, etc.)

This letter is essential for filing for unemployment benefits and job searching. It also protects you if a future employer or agency needs verification.

3. Review (and Negotiate) Your Severance Package

Severance packages are not required by law in most cases, but many companies offer them voluntarily. A standard package might include:

  • Several weeks or months of continued pay

  • Continued health insurance (fully or partially paid)

  • A release of legal claims

  • Non-disparagement and confidentiality clauses

Never sign immediately—ask for time to review. You may be able to negotiate more favorable terms, especially if:

  • You’ve been with the company for many years

  • You’re being asked to sign a non-compete agreement

  • You’ve waived the right to sue

Consider having an attorney review the agreement before you sign.

4. File for Unemployment Benefits Right Away

Don’t delay applying for unemployment insurance. Each state has its own process and eligibility requirements, but you’ll generally need:

  • Your separation letter

  • Social Security number

  • Recent pay stubs or income history

In most states, you can file online or by phone. Benefits may take a few weeks to kick in, so start the process as soon as possible.

5. Extend or Replace Health Insurance Coverage

If your employer-provided health plan is ending, you have several options:

  • COBRA continuation coverage (you pay the full premium + admin fee)

  • Marketplace insurance via Healthcare.gov

  • Spouse or domestic partner’s plan

  • Short-term or catastrophic coverage (less ideal but cheaper)

Don’t go without coverage—many life events, including layoffs, trigger special enrollment periods.

6. Secure Your Retirement Accounts

If you had a 401(k) or other retirement plan, consider:

  • Rolling it over into an IRA or new employer plan (to avoid taxes/penalties)

  • Leaving it where it is (if allowed)

  • Reviewing your investment strategy based on your new income status

Avoid withdrawing funds unless absolutely necessary—early withdrawals may trigger penalties and taxes.

7. Gather Important Records Before Access Is Cut Off

Before your accounts are disabled:

  • Download copies of your performance reviews, employment agreements, and pay stubs

  • Collect W-2 forms, bonus or commission documentation, and benefit records

  • Make a list of contacts, achievements, and portfolio samples if applicable (but don’t take proprietary or confidential company data)

These records will help with taxes, future employment, and legal questions.

8. Update Your Resume, LinkedIn, and References

Start preparing your job search tools:

  • Update your resume to reflect your most recent achievements

  • Edit your LinkedIn profile to include your latest role

  • Reach out to colleagues or supervisors for references or endorsements

You don’t need to mention the layoff on your resume—focus on results and skills. During interviews, you can frame the layoff factually and confidently.

9. Be Alert to Warning Signs of Wrongful Termination

Most layoffs are legal, but red flags include:

  • Being laid off for discriminatory reasons (age, gender, race, disability)

  • Getting terminated after reporting harassment or unsafe conditions

  • Being the only person laid off after taking FMLA or medical leave

  • Being pressured to resign without valid cause

If any of these apply, speak with an employment attorney. You may be entitled to compensation or reinstatement.

10. Take Care of Your Mental Health and Financial Planning

A layoff can trigger anxiety, depression, and feelings of worthlessness. Take time to:

  • Talk with friends or a therapist

  • Stick to a healthy routine (sleep, meals, exercise)

  • Join professional support groups or networking circles

Also review your budget. Cut non-essential spending and look for ways to stretch your emergency fund while you plan your next steps.

Protect Yourself with LegalShield
Being laid off is never easy—but you don’t have to go through it alone. With LegalShield, you can speak with an employment attorney about your severance, get help negotiating your exit, and explore your legal options if your termination was unfair. Affordable legal protection gives you peace of mind and the confidence to move forward. Click here to see how LegalShield supports professionals during life’s biggest transitions.

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