Tech Pros: Yes, You Can (and Should) Negotiate Your Layoff!
Are you a tech professional who is expecting layoffs at your company? Did you know that you can negotiate the details of your termination in the same way that you negotiated your initial job offer? Read on to learn more.
Although the tech industry has weathered the coronavirus pandemic better than other sectors, thousands of tech workers have nonetheless been laid off in recent months. While Amazon, Microsoft, and of course, Zoom have gained significant traction during the pandemic, others like Uber, Lyft, Airbnb, and many venture-backed start-ups have cut headcount deeply.
If you are a tech professional who may be facing potential layoffs, here are some negotiating points to consider as you prepare to exit.
Negotiate Severance Pay
Severance is generally payment that you may receive after an involuntary job termination. If you receive a severance pay offer, make sure to understand how your employer determined the severance amount. You may ask for additional weeks of salary based on your length of service or the estimated time it might take to find a similar job given the prevailing economic climate. You may request a lump sum payment or ask your employer to continue salary payments over a defined period. Extended salary payments may impact your eligibility for unemployment benefits, so please check your state's guidelines about unemployment benefits and severance pay or ask your financial planner.
Get Paid for Vacation and Sick Leave
You may request payment for unused vacation and sick days. Review your company's handbook or intranet site for details about how your employer calculates vacation and sick pay accruals. You may opt to receive unused time off in cash. You can also discuss using the remaining vacation days to look for a job, so that prospective employers will be able to verify your current employment and good standing.
Extend Your Benefits
Most employers will offer COBRA, but you may request an extension of your current insurance coverages for a few months while you look for a new job. You can ask your employer to continue to pay for your medical, dental, and vision benefits for a defined period, which is significant because COBRA is far more expensive. Extending your benefits gives you more time to find another job with similar benefits or shop the health insurance marketplace. Once your employer stops paying for your health coverage, it is considered a qualifying life event, which means that you can shop for health insurance outside of open enrollment.
You may also ask your employer if they can extend your life insurance coverage for a few months to keep your family protected.
Preserve Your Company Equity
It helps to read up on the kind of company equity that you have. Do you have restricted stock units (RSUs), incentive stock options (ISOs) or non-qualified stock options (NQSOs)?
You may ask your employer to consider accelerating the vesting of your unvested company equity grants since you are leaving the company through no fault of your own.
If you have ISOs, ask your employer to extend the timeline for exercising beyond the typical 90-day expiration window from employment termination. Most people aren't excited about buying the stock of a company that has just let them go, especially if the company's long-term viability is questionable. An extended exercise timeframe gives the company some time to recover and offers you the opportunity to participate in the success of the company that you helped to grow.
One issue with extending the exercise window beyond the normal expiration date is that you'll have to convert your ISOs to NQSOs and forgo some unique tax advantages. Speak with a financial planning or tax expert to weigh your options (no pun intended) as company equity decisions often have far-reaching tax implications.
Keep More of Your 401(k)
Your 401(k) contributions always belong to you, but employer contributions typically vest over time. If you have some unvested employer contributions at the time of termination, you may ask to keep the unvested portion of your 401(k) account.
If you are a high-wage earner, you may consider contributing the maximum permissible amount to your 401(k) from your last few paychecks if your employer's plan will permit it. This allows you to sock away more money for retirement and save on taxes. This is important because it may be some time before you can contribute to a retirement plan again.
Gather Your Professional Assets
Before you leave, make sure to request copies of your past performance reviews from your employer. These could help you secure a new job, and help you identify your strengths as you spruce up your resume and job site profiles. Ask your current managers for commendations and letters of endorsement. You should also exchange contact information and discuss how your employer will handle employment verification requests over the coming months.
Conclusion: Prepare for a Successful Exit
If you believe that layoffs are imminent, prepare for exit negotiations. Document the reasons for your requests (e.g., length of service, your contributions to the company, current economic climate) to increase your likelihood of success. When HR presents you with a termination package, tell your employer that you'll need a few days to review the details. If possible, have a financial planning professional review your severance package.
Finally, take a deep breath and check your mindset. This too shall pass, and will bring new opportunities to rediscover yourself and repurpose your skills. Onward and upward!