10 Ways To Handle Losing a Job

Losing a job can be a devastating and unexpected experience. It can disrupt stability and force you to worry about things like paying the mortgage and maintaining health insurance coverage. In this difficult economy, those facing job loss or mass layoffs are not alone.

There are professional resources and networks of support that can ease the situation. If you or someone you know is facing the prospect of job loss, use the opportunity to become informed, reflect on your options, and reinvent yourself for the changing economy. For a quick start, here is a list of ten things you can do after losing your job.

1. Collect Final Compensation from Your Employer

An employee is entitled to a final paycheck and possibly severance pay as well. State laws require an employer to give an employee a final paycheck within a certain time. Laws vary from state to state, but an employer must issue your final paycheck either at your departure, the next business day, the next payday, or within a certain number of days. In some states, the employee may be entitled to compensation for unused vacation time.

An employee may also receive additional compensation in a severance package. Under state law, an employer is not required to offer severance pay. An employee has a right to severance pay if:

• The terms of a written contract provide for it
• An employee handbook documented the employer's policy for severance pay
• The employer made an oral promise

In most cases, an employer offers a severance package in exchange for the employee's agreement to release the employer from legal liability for the termination.

2. File for Unemployment Compensation

Continue receiving income after losing a job by filing a claim for unemployment benefits. In general, state law allows an unemployed worker to collect unemployment compensation if the person:

• Became unemployed through no fault of their own
• Was for a sufficient amount of time
• Earned a sufficient amount in wages
• Can work immediately
• Is physically capable of working

Check with the unemployment agency in your state to determine specific eligibility requirements for unemployment insurance.

3. Continue Healthcare Coverage

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986, former employees have the right to continue healthcare coverage for up to 18 months (sometimes longer if a plan participant has a disability) under the employer's plan. The former employee must pay the full premium, but this cost is usually less than obtaining coverage on your own. 

Within 45 days after losing a job, the former employee will receive an election notice and will have 60 days to elect coverage. If coverage is elected by the employee, the initial premium must be paid within 45 days.

Though you and your family may extend coverage through COBRA, there are some important considerations you should take into account while you are still covered under your company's healthcare plan.

Consider negotiating with your healthcare physicians to continue care at a lower rate than the insurance company was billed. In light of the general economic times, they may agree which would enable uninterrupted healthcare by trusted physicians.

4. Prepare Your Resume

If employed for a long time, it may be necessary to create a new resume that reflects current skills and experience. A resume should be truthful, accurate, error-free, and highlight relevant skills. If you have trouble creating a resume, consider hiring a professional resume service.

5. Look for a New Job

It's a good idea to start your job search right away. Depending on your skills and the job market, it might take a while to land a new job. Getting straight into your search allows you to maintain your momentum and helps with prospective employers, who often are wary of applicants who have been out of work for an extended period.

Conducting a job search can be time-consuming. Think of your search as a temporary full-time job. Obtaining a new job can be a numbers game. The more contacts you make, the better your chance of finding a job that fits your needs.

These days, most job searches are conducted online. Start by identifying websites that contain the kinds of job postings you are seeking. LinkedIn, Glassdoor, and Indeed are three useful sites, but there may be others that are a better fit for you. When you find a good opportunity, don't hesitate to apply. Openings don't last long in a hot job market full of fellow job seekers.

In looking for employment, don't forget to enlist the help of your personal network, including family members, friends, former bosses, coworkers, headhunters, and employment agencies. You never know who might be the source of your next employment opportunity.

6. Look for a Part-time Job

Consider obtaining a part-time job or working odd jobs to bring in temporary income. Obtaining part-time work or earning income from odd jobs like house sitting or doing handy work will only require a short-term commitment while you search for permanent work. Note that with some part-time employment, you may have to forgo receiving unemployment compensation. Your state's unemployment agency can explain the eligibility rules.

7. Consider Starting Your Own Business

Do you have a marketable skill that can translate into a profitable business? Sometimes losing a job comes at just the right time. If you've ever thought about starting your own business, this is a good time to give it serious consideration.

8. Eliminate Unnecessary Expenses

While unemployed, eliminating unnecessary expenses will make it easier to live on less income. For instance, get rid of inessential services like gardening, pest control, and housecleaning, and reduce costs even further by limiting clothing purchases and reducing cable programming.

9. Manage Your Debt

If possible, do not incur new debt. When unemployed, it is important to maintain a strict budget to avoid unmanageable debt. Acquiring new debt often leads to bigger financial problems than just unemployment.

If necessary, contact your creditors to request a temporary payment arrangement or a suspension of payments after losing a job. In times of high unemployment, some credit card companies are willing to agree to temporary payment plans with no interest. Many creditors would rather grant this type of request than risk a default on payments by the debtor.

10. Deduct Job Hunting Expenses from Your Taxes

The IRS allows job hunters to deduct certain expenses from their taxes if the taxpayer is seeking employment in the same line of work and the expenses exceed 2% of the taxpayer's adjusted gross income. Allowable expenses include:

• Travel and transportation costs
• Resume printing and mailing
• Fees from employment and outplacement agencies
• Phone calls to prospective employers

Keep a list of expenses you pay for as you search for your next job.

You Don't Have To Solve This on Your Own – Get a Lawyer's Help

An employment law attorney can help you understand your options and how to best protect your rights regarding unemployment benefits, wrongful termination, and more. Reach out to an employment lawyer to learn more.