Lost your job in the US.
Here's what to do.

At-will employment: what it means for you

Most US workers are employed "at will," which means your employer can terminate you for any reason — or no reason — without warning, without notice pay, and without severance. You can also leave for any reason at any time.

This doesn't mean you have no rights. It means your rights are different from what workers in other countries typically expect. What you're primarily entitled to are:

• Your final paycheck (with timing rules that vary by state)
• Continued health insurance via COBRA (if you were on employer coverage)
• Unemployment insurance benefits (if you qualify)
• WARN Act notice pay in some large-scale layoffs
• Protection from discrimination, retaliation, and certain wrongful terminations

The rest of this guide covers each of these in plain English.

COBRA health insurance — act within 60 days

This is the most time-sensitive issue for most American workers losing their jobs. If you were on employer-sponsored health insurance, you have 60 days from the date you receive your COBRA notice to elect continuation coverage. Missing this window means losing coverage entirely until your next enrollment opportunity.

What COBRA gives you

COBRA lets you stay on your employer's health plan for up to 18 months after job loss. The catch: you pay the full premium — including the portion your employer was paying — plus up to a 2% administrative fee. For many people, this is expensive: average family coverage can run $2,000–$2,500 per month.

Your alternatives to COBRA

Job loss is a qualifying life event, giving you a 60-day Special Enrollment Period on the ACA marketplace at HealthCare.gov. Depending on your income, marketplace plans may be significantly cheaper than COBRA — especially if you qualify for premium tax credits. Compare both before deciding.

If your spouse or domestic partner has employer coverage, you can also join their plan within 30 days of losing your own coverage.

COBRA contacts

Questions about COBRA rights: US Department of Labor — Employee Benefits Security Administration at dol.gov/agencies/ebsa or 1-866-444-3272.

Unemployment insurance — file immediately

Unemployment Insurance (UI) is state-administered, meaning the rules, benefit amounts, and duration vary significantly depending on where you live. The federal government sets baseline requirements; states determine the rest.

File the week you lose your job

Don't wait. UI benefits typically start from the week you file, not the week you were let go. Some states have a one-week unpaid waiting period before benefits begin, but the clock still starts when you apply. File online at your state's workforce development website — search "[your state] unemployment insurance" to find the right portal.

What you'll typically receive

Benefits usually replace 40–60% of your prior wages, up to a state weekly maximum. Most states provide up to 26 weeks of benefits, though this varies:

• Massachusetts: up to 30 weeks
• Montana: up to 28 weeks
• Florida and North Carolina: as few as 12 weeks
• Georgia: up to 14 weeks

To remain eligible, you must be able and available to work, and actively searching for employment. Most states require weekly certifications confirming this.

Who qualifies — and who doesn't

You generally qualify if you were laid off or made redundant through no fault of your own. You generally don't qualify if you were fired for misconduct, or if you resigned without good cause. However, "good cause" can include constructive dismissal — if conditions were made intolerable — so it's worth filing and letting the system determine eligibility. If your employer contests your claim, the process takes longer but you still have the right to appeal.

Your final paycheck

Federal law (the Fair Labor Standards Act) requires that you receive all earned wages. The timing is governed by state law, and rules vary significantly.

Your final paycheck must include all wages earned through your last day. Whether it must include accrued, unused PTO or vacation depends on your state:

• California, Colorado, Illinois, Massachusetts: Accrued PTO must be paid out
• Most other states: Depends on employer policy — check your employment contract and employee handbook

If your employer fails to pay your final wages on time, contact your state Department of Labor to file a wage claim. There's no cost to file.

Severance pay

There is no federal law requiring employers to pay severance. However, if your employer has a written severance policy, a contractual obligation, or a regular practice of offering severance, you may have a legal right to it under that commitment.

What's typically offered

If severance is offered, a common formula is one to two weeks per year of service. Some companies offer fixed packages regardless of tenure. In either case, the offer is often negotiable — especially if you were a higher earner or long-tenured employee.

Before you sign anything

Severance agreements almost always include a release of all legal claims against your employer. By signing, you give up the right to sue. Read the agreement carefully, and consider having an employment attorney review it — many offer free or flat-fee consultations for exactly this.

Watch for non-compete clauses

Severance agreements sometimes include non-compete or non-solicitation clauses limiting where you can work next. Enforceability varies widely by state — California generally does not enforce non-competes, while others (Texas, Florida, New York) do under various conditions. If your agreement includes one, understand what it actually restricts before signing.

The WARN Act — large layoff protections

The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to give 60 days advance written notice before large-scale layoffs or plant closings. If your employer failed to provide this notice, you may be entitled to back pay and benefits for each day of notice that was missed.

When WARN applies

Federal WARN applies to employers with 100 or more full-time employees. It's triggered by:

• A plant closing: 50 or more employees at one site lose their jobs
• A mass layoff: 500 or more employees, or 50–499 if that represents at least a third of the workforce

If WARN applies and your employer didn't give 60 days notice, you may be owed up to 60 days of back pay and benefits. Consult an employment attorney or contact the US Department of Labor at dol.gov.

Wrongful termination — when you may have a claim

Despite at-will employment, there are meaningful circumstances where termination is unlawful. You cannot legally be fired for:

• Discrimination: Race, colour, religion, sex, national origin (Title VII), disability (ADA), age if 40+ (ADEA), pregnancy, genetic information (GINA)
• Retaliation: For filing a complaint, reporting illegal activity, taking FMLA leave, filing a workers' compensation claim, or participating in a union
• Protected leave: Jury duty, military service (USERRA), or approved FMLA leave

Filing a complaint

Discrimination and retaliation claims go through the Equal Employment Opportunity Commission (EEOC). You must file a charge before you can sue. Deadlines are strict:

• 180 days from the discriminatory act in states without their own fair employment agency
• 300 days in states that have their own agencies (most states)

File at eeoc.gov or call 1-800-669-4000. The EEOC process is free. After filing, you can also pursue mediation or a civil lawsuit.

Housing — mortgages and rent

If you have a mortgage

Contact your loan servicer before you miss a payment. Most servicers have hardship programmes and are required to discuss loss mitigation options with you. Forbearance (pausing or reducing payments temporarily) is available for many loan types — especially FHA, VA, and USDA-backed mortgages.

For free, HUD-approved housing counselling: call 1-800-569-4287 or visit consumerfinance.gov. These counsellors can help negotiate with servicers at no cost to you.

If you're renting

There is no federal job-loss rental protection. However, many states and cities have emergency rental assistance programmes — especially if your income drops sharply. Call or text 211, or visit 211.org, to find local assistance programmes in your area. Some states also have renter protection laws around eviction notice periods that can buy you time.

Tax implications

Severance pay

Severance is taxed as ordinary income and subject to standard withholding. It will appear on your W-2. There is no way around this — but if you receive a large lump sum in a lower-income year, your overall tax bill may be less than expected.

Unemployment benefits

Unemployment insurance benefits are federally taxable. You can elect to have federal tax withheld (10%) from your UI payments to avoid a bill at tax time. Around 20 states fully exempt UI benefits from state income tax — check with your state revenue agency.

Your 401(k) — don't cash out

If you cash out your 401(k) before age 59½, you face a 10% early withdrawal penalty plus ordinary income tax on the full amount. On a $50,000 balance, that can mean losing $15,000–$20,000 to taxes and penalties. Instead:

• Roll over to an IRA: Do a direct rollover (institution to institution) within 60 days — no tax event
• Leave it in the plan: You can often leave your balance in your former employer's plan temporarily
• Move it to a new employer's plan: When you start a new job

Check your vesting schedule before you leave — unvested employer contributions may be forfeited.

Retraining and career change — free options

The US has a network of federally-funded resources for displaced workers. These are underused and worth knowing about.

American Job Centers

There are over 2,500 American Job Centers across the country, funded by the Workforce Innovation and Opportunity Act (WIOA). Services are free and include career counselling, job search assistance, resume help, and referrals to funded training programmes. Find your nearest centre at careeronestop.org or call 1-877-872-5627.

WIOA-funded training

If you qualify, WIOA can pay for approved training programmes through an Individual Training Account (ITA). This is real money toward certificates, apprenticeships, or degrees — not just career advice. Eligibility is assessed at your local American Job Center.

Trade Adjustment Assistance (TAA)

If your job was lost due to foreign trade, imports, or outsourcing, you may qualify for TAA — a federal programme that provides extended UI benefits, retraining funds, health coverage assistance, and job placement support. Check whether your employer filed a TAA petition at dol.gov/agencies/eta/tradeact.

Pell Grants for workforce training

Since 2023, Pell Grants have been expanded to cover short-term workforce training programmes (as little as 8 weeks). If you're considering a community college certificate programme, check whether your programme is eligible — this can significantly reduce or eliminate your out-of-pocket costs.

Community colleges

Community colleges remain the most accessible and affordable pathway to career change. Many have dedicated workforce development divisions with employer partnerships and job placement support. Certificate programmes in healthcare, IT, skilled trades, and business administration typically take 6–12 months.

If you're over 50

Workers 40 and older have additional legal protections — and some practical considerations that younger workers don't face.

Age discrimination protections (ADEA)

The Age Discrimination in Employment Act protects workers 40 and older from discrimination in hiring, firing, pay, and promotions. If you believe age was a factor in your termination — especially if younger workers were retained — document everything and file an EEOC charge within 300 days.

Your severance waiver rights

If you're 40 or older and being asked to sign a release of age discrimination claims as part of a severance package, you have the right to 21 days to review the agreement and 7 days to revoke after signing. In a group layoff, you get 45 days to review and must receive a list of the roles and ages of everyone included and excluded in the layoff.

SCSEP — subsidised employment for 55+

The Senior Community Service Employment Program (SCSEP) provides subsidised part-time employment and on-the-job training for workers 55 and older who meet income guidelines. It's a legitimate pathway back into the workforce. Find out more at careeronestop.org/LocalHelp/EmploymentAndTraining/find-older-worker-programs.aspx.

AARP Foundation

AARP Foundation's Back to Work 50+ programme offers free job search support, skills workshops, and connections to employers actively seeking older workers. Visit aarp.org/aarp-foundation/our-work/income/back-to-work-50-plus.

Social Security — timing matters

If you're approaching retirement age, the decision of when to claim Social Security can significantly affect your lifetime income. Claiming at 62 reduces your benefit permanently. Your full retirement age is 66–67 depending on your birth year. Delaying until 70 maximises your monthly benefit. If you can manage financially, waiting is usually worth it — but the right answer depends on your health, savings, and circumstances. The SSA website (ssa.gov) has calculators to help.

If you're 65 or older, you can enrol in Medicare during your COBRA election window. Medicare is almost always less expensive than COBRA for those who qualify — compare before electing.

Your first week — what to do

Quick reference contacts

Key deadlines — don't miss these