What Are an Employee's Rights After Job Termination?

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Woman leaving office with a box of her things after her job was terminated
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Most private-sector employees in the United States are employed at-will, which means that their employers can terminate their job at any time, for any reason or no reason at all—barring discrimination.

This means that many newly terminated employees are taken by surprise. While some employers may provide warnings and advance notice of termination, others move swiftly and unexpectedly. If you've recently lost your job, you may be wondering what your rights are.

Key Takeaways

  • Most workers in the U.S. are employed "at will" meaning they can be fired for any (or no) reason at all, barring unlawful discrimination.
  • Some companies provide severance pay or other protections, but they are not obligated to do so.
  • Experts recommend having 3 to 6 months' worth of expenses saved up as protection from losing your job.
  • Unions are a strong source of protection but aren't available for all workers.

Your Rights When Your Employment Is Terminated

Because a layoff can happen to anyone, often without warning, it is extremely important to be prepared to change jobs. Periodically update your resume, even if you don’t think you will need it soon. Keep your LinkedIn profile up to date, and keep in contact with your network. Have a few potential references in your back pocket, so that you won’t have to start from scratch if you lose your job.

Preparing yourself for all outcomes will allow for a smooth transition if you need to make any change in employment.

Fortunately, terminated employees do have certain rights. In addition to a final paycheck, employees could be entitled to things like continued health insurance coverage, extended benefits, severance pay, and unemployment compensation. It is important to know exactly what your rights are as an employee when you lose your job.

Sources of Employee Rights

Contract Rights: Employees who have an individual contract with their employer or employees covered by a union/collective bargaining agreement would be covered under the stipulations in the contract if their employment is terminated.

Company Policy: When a company plans layoffs, it may have a severance plan in effect. If so, severance pay may be provided if your employment is terminated. However, there is no federal law requiring businesses to pay severance.

Statutory Rights: Statutory rights are those provided by federal or state law. They include unemployment insurance, advance notification of the closing of or a substantial layoff at a facility (depending on the size of the company), anti-discrimination laws, and anti-retaliation laws.

Getting Information on Your Rights: When you're not sure about your rights, the best place to start is with the company Human Resources department. Even if they are in the process of terminating your employment, they can answer questions, let you know what company benefits you are eligible for, and guide you through the process of leaving employment.

Where To Get Help for Unlawful Terminations

If you feel that you have been discriminated against or haven't been treated according to the law or company policy, you can get assistance.

The U.S. Department of Labor, for example, has information on each law that regulates employment and advice on where and how to file a claim. Your state labor department may also be able to assist you, depending on state law and the circumstances.

Also, local bar associations often have a referral service and may even have a hotline you can call to find an employment lawyer. Keep in mind that you will need to pay for an attorney's services, although some will provide the initial consultation free of charge.

Frequently Asked Questions (FAQs)

Is everyone eligible for unemployment?

No. The federal and state governments provide unemployment benefits to workers who were fired through no fault of their own. Check your state's labor site for exact eligibility details, as these can vary.

What is wrongful termination?

Wrongful termination occurs when an employee is fired for illegal reasons or in a way that breaches their contract. You may be able to claim wrongful termination if you were fired for the following reasons::

  • Breach of contract
  • Discrimination
  • You refused to commit an illegal act
  • Company policy is violated
  • Whistleblowing

What happens to your 401(k) when you get fired?

When you are leaving your current company, either for a new job or because you were fired, you essentially have four options:

  • Keep the current funds in your old employer’s plan
  • Move the money to your new employer’s plan
  • Move the money to a self-directed retirement account (known as a rollover IRA)
  • Cash out

Many people take one of the first two options as you will be penalized by the IRS for taking distributions before the age of 59.5.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Department of Labor. "Termination."

  2. IRS. "401(k) Resource Guide - Plan Participants - General Distribution Rules."

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