How to Navigate a Tech Layoff
Losing a job can be a difficult and stressful experience, especially for tech workers who may have specialized skills and a competitive job market. However, there are steps that tech workers can take to mitigate the negative impact of a layoff and position themselves for future success.
Next Steps
While a layoff can be a challenging and uncertain time, with the right approach, tech workers can turn it into an opportunity for growth and a chance to pursue new and exciting opportunities.
File for unemployment benefits, if eligible. Review your household budget and consider cutting unnecessary expenses until cashflow normalizes.
Update and improve your resume and LinkedIn profile. Keeping an up-to-date profile can help optimize your profile for recruiters searching for the right candidate.
Network with other professionals in their field to learn about new job opportunities. Expanding your network on LinkedIn could open further opportunities you may not have been aware of.
Consider upskilling or reskilling to make themselves more marketable in their current field or a new one. This may be an opportunity to make a career or educational switch you’ve thought about in the past.
Look for job opportunities both in their current location and in other cities or remote locations.
Take a break and take care of themselves if needed, it could be a good time to reflect and plan.
Eligible Benefits
You may also be eligible for certain benefits depending on your employer and the local laws. If you work with a financial advisor this is a good time to revisit your financial plan to review your options. Some common benefits that may be available include:
Health insurance: COBRA allows employees to continue their employer-sponsored health insurance for a certain period; it can be expensive, but worth it. If your spouse and/or children rely on having health insurance, it may be a good idea to take advantage of this benefit. The extension of your COBRA coverage will vary depending on the state you reside in. In Washington & Texas it’s 18 months, but up to 36 months in California, Colorado, and Virginia.
Retirement benefits: If the worker was vested in a 401(k) or other retirement plan, they may be able to keep their money in the plan or roll it over into an IRA.
Severance pay: Some employers may offer a severance package to laid-off employees, which can include a lump sum payment and/or continued pay for a certain period of time.
Outplacement services: Some employers may provide job search assistance, such as resume writing and interview coaching.
Job training: Some employers may offer job training to help laid-off employees find new employment.
It's important to check with the employer's human resources department to find out what benefits are available and how to access them. Also, they should check with their state's unemployment office to know their rights and how to file for benefits.
Equity Compensation
Lastly, what happens to your valuable equity compensation (RSU, ISO, NQSO, ESPP)? RSUs are typically granted to employees as a form of long-term incentive and vesting typically occurs over time. When an employee is laid off, their RSUs may be affected in the following ways:
Vested RSUs: If the RSUs have vested, the employee will typically be able to keep them and receive the shares or cash equivalent after the vesting date. They may be able to sell the shares or hold on to them if they believe the company's stock will increase in value.
Unvested RSUs: If the RSUs have not yet vested, the employee may lose the right to receive them if they are not vested at the time of the layoff. The company may have a policy on what to do with unvested RSUs when an employee is laid off. Some companies may allow employees to retain their unvested RSUs, while others may require them to be forfeited.
Consideration of tax implications: RSUs are considered as compensation income and taxed as such, which means that taxes will be calculated based on the share price on the date of vesting. Typically, your employer with withhold a portion of the vested shares as tax withholding. If you have shares that vested in prior year that you’ve held onto, it may be subject to additional capital gains tax if they have appreciated and are sold.
It's important for the employee to check with their employer or their equity plan administrator to understand the specific terms of their RSUs and how they will be affected by the layoff. They should also consult with a tax professional to understand the tax implications of your RSUs.
DISCLOSURES:
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
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Consilio Wealth Advisors, LLC (“CWA”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where CWA and its representatives are properly licensed or exempt from licensure.
