Tips on severance packages, health insurance, unemployment insurance, and final paychecks.

Whether you leave your job voluntarily or through a termination or lay off, there are a number of loose ends you will want to tie up before you walk out the door.

Severance Pay

No law requires an employer to provide severance pay to employees who the employer terminates or lays off. Nevertheless, many employers may offer one or two months' salary to employees who are forced to leave their jobs through no fault of their own. Some employers may be more generous to long-term employees, giving perhaps one month's pay for every year an employee worked for the company.

While no law requires severance pay, an employer may be legally obligated to give you severance pay if it promised to do so -- for example, through:

• a written contract stating that the employer will pay you severance
• a promise of severance pay in an employee handbook or manual
• a long history of the company's paying severance to other employees in your position, or
• an oral promise to pay you severance -- although you may run into difficulties proving the promise existed.

A severance package can include more than just money. If you are in a position to negotiate a package (perhaps your termination is questionable and your employer wants to keep you from going to court), consider asking for these other benefits:

• Insurance benefits. Health insurance continuation laws allow you to keep the same health care you had with your employer but require you to pay the full cost of the premiums for continued coverage. There is, however, nothing in these laws that prevents your employer from picking up the tab if it agrees to do so as part of a severance package.
• Uncontested unemployment compensation. Sometimes, employers will try to contest the unemployment claim of a terminated worker. Ask your employer to agree not to do so. It will make getting unemployment benefits a lot easier.
• Outplacement services. Outplacement firms help employees find new jobs. They may offer counseling, job skills training, tips on resumé and cover letter writing, and leads on potential jobs. In addition, they may give you a place where you can use a computer, receive faxes, and have a receptionist answer the phone. Many employers are now paying for these types of services as part of a severance plan.
• References. If you are leaving your job under less-than-pleasant circumstances, you might work with your employer to come up with a mutually agreeable letter of reference.

Final Paycheck

Many states have laws that specify when departing employees must be given their final paycheck. Often, the outcome depends on whether you are leaving because you quit or because you were fired or laid off.

For example, in some states, employees must be given their final paycheck immediately or within a certain number of hours if they are terminated or laid off, but not until the next scheduled payday if they quit. Some of these state laws also specify whether your accrued, but unused, vacation pay must be included in your final paycheck. For more information, contact your state's labor department.

Health Insurance

A 1986 federal law -- the Consolidated Omnibus Budget Reconciliation Act (COBRA) -- and similar state laws provide for health insurance continuation when an employee quits, is laid off, or is fired for any reason other than gross misconduct.

Under COBRA, employers with 20 or more employees must offer them the option of continuing to be covered by the company's group health insurance plan for a specific period -- often 18 months -- after employment ends. However, the worker must pay the full cost of participating in this coverage. Continued health care coverage under COBRA also includes coverage for your dependents -- at your cost. (Under some other circumstances, coverage may be extended for up to 36 months -- for example, if the employee dies, his or her dependents can continue coverage for up to 36 months.) To learn more about COBRA, refer to the U.S. Department of Labor website at http://www.dol.gov.

Your state might have its own health care continuation law that provides better or broader coverage than the federal COBRA. This means it may cover smaller employers and/or provide more benefits. Your employer must follow whichever law is most beneficial to you. To find out more about your state's law, contact your state insurance office or labor department.