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Job Termination

There are limitations on terminating an employee, and employees who have been terminated are granted certain rights under state and federal law. It's important to know these rights and limitations and to understand the various methods of insuring yourself if you lose your job.

State Labor Laws and Federal Government Protections

Your state’s labor laws might provide you with important employee rights, and the federal government provides workers leaving a job with basic rights:

  • The right to continue health insurance under the COBRA insurance program. Under COBRA, you may pay the entire cost of your health insurance under your former employer’s plan for approximately 18 months. The Health Insurance Portability and Accountability Act allows you to purchase individual coverage if no group health coverage is available and you have exhausted COBRA or other continuation coverage.
  • The right to receive any back pay still owed to you.
  • The right to receive your last paycheck in a timely manner. Many states will let your employer wait to pay you until the next scheduled payday if you leave voluntarily. Earlier payment is possible when your employer terminates your employment for reasons other than gross misconduct.
  • The right to receive certain 401(k) orpension fundsowed or accrued. Federal law requires certain employers’ plans to pay retirement benefits no later than the time a participant reaches normal retirement age. But many plans, including 401(k) plans, allow earlier payments under certain circumstances.

If you are not covered by the preceding provisions pertaining to 401(k) and various pensions programs upon leaving your job, you should consult your state’s labor law statutes. Otherwise, you likely will be bound by your former company’s employee handbook.

You should look to your employment contract, employee handbook or state law to recover any accumulated sick leave, bonuses or vacation pay (assuming you are not a federal government employee with contractual rights). You might be able to negotiate a termination contract with your former employer that guarantees you some or all of your accrued benefits in exchange for a waiver of certain future rights.

Wrongful-Termination Claims

Wrongful-termination lawsuits may be based on many types of workplace problems or circumstances. Plaintiffs have successfully alleged that they’ve been wrongfully fired when the following facts or circumstances were involved:

Information to Save Upon Termination

Regardless of whether you’re seeking a new job voluntarily or because your employment was terminated, try to take copies of the following items with you to protect your future interests:

  • A copy of the employee handbook.
  • A copy of your employment contract, if applicable, previously signed and dated by both you and your employer.
  • A written copy of your starting job description and an updated copy if it was modified before your departure.
  • A written and signed statement about the reasons for your departure. This is important because it can determine:
    • whether you’ll be granted unemployment benefits;
    • what future employers will be told about the reason for your departure;
    • which employee benefits you may be entitled to upon leaving, including health care coverage, accrued employee leave and funds deposited in a 401(k), pension or other program.
  • Copies of all materials in your personnel file that your employer will release to you. If allowed, be sure to obtain documentation concerning:
    • your paid wages,
    • employee benefits,
    • promotions,
    • job evaluations,
    • any signed statements made by your supervisors or co-workers,
    • bonuses paid or promised.
  • A copy of any termination or employment severance contract you signed. Try to refrain from signing one if you have questions that might be answered best by an attorney. You want to avoid unintentionally jeopardizing any of your future rights.
  • A copy of any covenants not to compete. These include documents or contracts stating that you will not seek similar employment for a stated time period and will not compete in a specific manner for a set time period.
  • Copies of any memos or e-mails sent to you or by you during your employment that your employer has not forbidden you to take under a claim of confidentiality. You may need an attorney to help you determine what you can and can’t take with you in this regard. Your goal is to protect yourself and have ample evidence to back up any of your future legal claims should your former employer try to deal unfairly with you.

All of this material can prove useful if you should later need to bring:

  • a wrongful-termination lawsuit;
  • an action against your previous employer for improperly challenging your receipt of unemployment-insurance benefits;
  • an employment-discrimination lawsuit;
  • an action based on your former employer’s failure to pay your outstanding employee benefits, including your last paycheck;
  • a lawsuit based on any other valid state or federal laws you believe your employer violated during your termination.

Unemployment Insurance

Whether you are leaving your job by choice or not, you should ask your employer to record the reason for your dismissal in writing. You cannot receive unemployment insurance benefits if your employer states that you’ve been let go for gross misconduct. Likewise, if you leave your job because you believe your health or general well-being will be threatened if you stay, you must be able to prove later that your reasons were compelling in order to receive benefits.


  • According to the Labor Department, eligibility for unemployment insurance, benefit amounts and the length of time benefits are available are determined by the state law under which unemployment insurance claims are established.
  • Your eligibility to receive unemployment insurance benefits is based on two factors:
    1. You must meet the state requirements for wages earned or time worked during an established period of time, referred to as the base period. In most states, this is usually the first four out of the last five completed calendar quarters before your claim was filed.
    2. You must be determined under state law to be unemployed through no fault of your own.

Most states pay unemployment insurance benefits for a maximum of 26 weeks. Your benefits usually are based on a percentage of your earnings over a recent 52-week period, up to a state maximum amount.

Last update: Oct. 6, 2008

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