Take the severance pay
An employer is not required to pay severance to the employees it lets go, but large companies do so under their policies or collective bargaining agreements. Severance might equal, for example, one week’s pay for each year worked. Professionals and managers receive the equivalent of 3 months’ or half a year’s salary.
Severance may seem like manna from heaven, but it rarely makes up for a lost or reduced employer pension. At a new workplace, you have to start building seniority from scratch. You are in a better position if you had a 401(k) retirement savings plan at work, because you can take the money you saved with you.
Severance can be paid as a lump sum or in several installments. It is worth taking installments for tax reasons. Severance is taxed in the year it is received.
How severance affects unemployment benefits
Note: Remember that severance pay can delay or rule out collecting unemployment benefits.
If the installment severance payments are equal to or higher than your previous pay, the severance is treated as continued salary and you will not get unemployment benefits. If the severance is paid in a single sum, the unemployment office will calculate how many months of pay it equals and disqualify you for that period. The rules vary from state to state. In New York, for example, you may be entitled to benefits if the weekly amount of severance is lower than the maximum weekly benefit, or if you receive the first severance payment more than 30 days after your last day of work.
Don’t sign anything in a hurry
To get severance pay, you must sign an appropriate agreement – a severance agreement. But this agreement is not just a receipt for your severance – it is meant to keep you from suing your employer for wrongful termination.
The agreement may include a non-compete clause, which bars you from working in your occupation for some period of time in some territory. In the past, non-compete clauses were reserved for high-ranking managers. But when workers are in short supply, employers try to make leaving harder by imposing non-compete terms even on security guards or music teachers!
Take the proposed agreement home and show it to your lawyer. Don’t rush, because your employer cannot do anything to you – after all, it cannot fire you a second time.
Don’t submit a letter of resignation
If you have been laid off, do not let yourself be talked into signing a letter of resignation. Human resources may slip one to you along with other papers. If you quit your job on your own, you will not get unemployment benefits. Such a letter could be used against you if you later wanted to file a lawsuit for wrongful termination on grounds of discrimination, breach of contract or whistle-blowing. If they insist, use it as a bargaining chip and negotiate more generous severance.
Do not think that, to your next employer, quitting on your own will look better on your resume than being laid off. Companies restructure often, and there is no shame in being laid off.
Take your retirement money with you
Many people have an employer retirement savings plan (employee savings plan) called a 401(k). Some companies allow you to leave the money in the account; some require you to take it out. In that case, you should transfer the money to your own IRA or to a 401(k) account with your new employer. Once you withdraw the money, you have 60 days to do this.
A warning: The worst option is to cash out your 401(k) account or deposit the money into a regular (non-retirement) account, because you will then have to pay income tax on it. In addition, a withdrawal from a retirement fund before age 59 and a half carries an extra 10% penalty. All in all, you will pay about 40% in taxes, and the remaining 60% will no longer grow tax-deferred. Don’t make this mistake.
Apply for unemployment benefits
If you lost your job through no fault of your own, you are entitled to unemployment benefits. You can apply online. In Google, type “unemployment” and the name of your state. While you are unemployed, you are required to look for work and report the results, so do not go on vacation or to Poland unless you notify the Unemployment Office of your trip.
Check your credit history
A new employer will want to check your credit history, and even your criminal record. Do it first. At each of the largest credit bureaus – Experian (www.Experian.com), TransUnion (www.TransUnion.com) and Equifax (www.equifax.com) – you can check your credit report for free every week; the bureaus have made this program permanent. You can do this conveniently through the only authorized website, www.annualcreditreport.com. You are also entitled to a free copy of your credit report if you have been denied credit, or employment, insurance or an apartment rental, on the basis of the report (you must request it within 60 days).
How to fix errors in your credit, criminal, driving and other records is explained in the book “Życie od nowa, jak uporządkować zaległe sprawy w urzędach” (“Life Anew: How to Sort Out Problems with Government Offices”).
Look for a new job
Update your resume and use every possible way of looking for work. There are many popular job sites online: Monster, ZipRecruiter, SimplyHired, CareerBuilder, Snag, LinkUp, Craigslist Jobs, US.jobs and many others.
Check newspaper ads, use employment agencies, open an account on LinkedIn.com, and send letters to the most promising companies. Do not hide from friends that you were laid off. New jobs are often found through personal contacts. Americans know this very well. There are even clubs meant to help their members with networking, that is, making new contacts, and with finding a job.
Good luck on the new road ahead.
Updated October 2026.
