Negotiating a larger severance package?
March 24, 2017 1:34 PM Subscribe
What's the process? What's the likelihood of getting a larger package?
I work for one of the large telecommunications companies but am getting laid off at the end of next week. I have all the paperwork, the acceptance letter, etc, but haven't signed and returned anything yet. I've heard people mention "negotiating for a larger severance package" but don't know the first thing about how that would work.
I've been there just over ten years. I make $50k~ per year. I'm a management employee. My package pays out in a lump sum, essentially 22 weeks of pay (minus taxes). My employer will pay full COBRA for my benefits package for the next 22 weeks. I have 45 days from the date of my seperation (which will be Mar 31) to either sign or decline the package offer.
Will I take a larger-than-normal tax hit on the lump sum? Can I collect unemployment (USA, Arkansas) after being laid off (via "reduction in force")? Should I be negotiating for a larger severance? How much larger?
I work for one of the large telecommunications companies but am getting laid off at the end of next week. I have all the paperwork, the acceptance letter, etc, but haven't signed and returned anything yet. I've heard people mention "negotiating for a larger severance package" but don't know the first thing about how that would work.
I've been there just over ten years. I make $50k~ per year. I'm a management employee. My package pays out in a lump sum, essentially 22 weeks of pay (minus taxes). My employer will pay full COBRA for my benefits package for the next 22 weeks. I have 45 days from the date of my seperation (which will be Mar 31) to either sign or decline the package offer.
Will I take a larger-than-normal tax hit on the lump sum? Can I collect unemployment (USA, Arkansas) after being laid off (via "reduction in force")? Should I be negotiating for a larger severance? How much larger?
It doesn't hurt to ask for more, and it almost never affects your base offer (i.e. they probably aren't going to say "no, and now we are reducing our offer in response...") 2 weeks/year of service is pretty standard for exempt employees. COBRA for an equivalent time is ok, but if you will need insurance maybe that is where you have an opportunity. You are eligible to elect COBRA and stay there for 18 months post-separation. It's just SUPER expensive. For most employers, they don't pay your whole COBRA cost, they just subsidize it so that you pay the same amount for insurance as you were paying when you were an employee. Maybe you could negotiate that they subsidize you for as long as you stay on COBRA?
I am in Illinois and not your lawyer and all that. But I left my job when my position moved away last year, and in our state unemployment is not affected by severance payments. I just called the Hot Springs office (I picked it at random) and talked to a woman there who was very nice. Take the answer with a grain of salt, but she said that if you were being paid regularly, you'd need to report that and it would affect your eligibility. But if you get a lump sum, she said it SHOULD just affect the week that you collect it.
Good luck. Being out of work, even when it is totally outside of your control, sucks. Take care of yourself.
posted by AgentRocket at 2:23 PM on March 24, 2017 [1 favorite]
I am in Illinois and not your lawyer and all that. But I left my job when my position moved away last year, and in our state unemployment is not affected by severance payments. I just called the Hot Springs office (I picked it at random) and talked to a woman there who was very nice. Take the answer with a grain of salt, but she said that if you were being paid regularly, you'd need to report that and it would affect your eligibility. But if you get a lump sum, she said it SHOULD just affect the week that you collect it.
Good luck. Being out of work, even when it is totally outside of your control, sucks. Take care of yourself.
posted by AgentRocket at 2:23 PM on March 24, 2017 [1 favorite]
Seconding AgentRocket's account. In Washington, lump-sum payments do not affect your unemployment status. Of course, Arkansas could be different, so visit the website or call. Usually folks at those offices are super-helpful!
posted by dbmcd at 2:41 PM on March 24, 2017
posted by dbmcd at 2:41 PM on March 24, 2017
IIRC, Arkansas is like everywhere else and a lump sum payment only reduces/eliminates your UI payment in the week you receive it. Thus, it is best to make sure your claim begins the week after you receive the lump sum payout so that you don't lose a week at the end. (Assuming the payout is coincident with your last week of work, rather than coming several weeks later, leaving you without income for a while, in which case you may as well go ahead and open the claim as soon as you are separated)
posted by wierdo at 5:15 PM on March 24, 2017
posted by wierdo at 5:15 PM on March 24, 2017
Re: negotiating for a larger severance. Do you know how many people are part of the RIF, and how many locations that encompasses? If you are the only employee getting RIF'ed, then I would like your chances to negotiate. If this is something like, for example, thousands of people spread across several states, then it will be difficult. Here is why: someone, or several someones, sat down with a spreadsheet to put together those severance packages and budgeted for them. You might be several steps removed from those folks - people you've never met, who aren't even in your geography, and put all of this together a couple of months ago. Who do you even negotiate with? Your manager and your local HR person will also be several steps removed and won't control that budget paying out your severance.
posted by kovacs at 8:31 PM on March 24, 2017 [1 favorite]
posted by kovacs at 8:31 PM on March 24, 2017 [1 favorite]
I'm so sorry to hear this, but this actually sounds like a decent severance package (especially the free COBRA because those monthly payments take a significant chunk out of your funds). I don't know your state but you are probably eligible for unemployment, which will kick in as of your last day of service. Ask your employer and contact Arkansas UI department. You can do most of these things online now. As for receiving it in a lump sum, you probably will lose a larger than normal amount to taxes initially. Confirm you are claiming the most legal exemptions you can, so they take out the least amount. You could funnel some of it into a 401k to reduce taxes, but it's better to keep this liquid right now.
In terms of money, I'm not sure you'd be successful asking for more, but you might try to negotiate for outplacement services, which are firms that help you figure out your next steps, assist you with your resume/LinkedIn/interview skills, and may even help with networking. Note: This is different than a recruiter or recruitment agency. The best outplacement firms focus solely on you by helpng to determine your ideal job, plot your job search, and brush up on your job hunting skills, but they will not be submitting you for jobs or advocating for you to receive a job. They may, however, hear of something through the grapevine and suggest you apply for it. They are coaches, essentially. It's something worth asking for your employer to procure for you. They can only say no. So sorry again & best of luck!
posted by katemcd at 9:44 AM on March 25, 2017
In terms of money, I'm not sure you'd be successful asking for more, but you might try to negotiate for outplacement services, which are firms that help you figure out your next steps, assist you with your resume/LinkedIn/interview skills, and may even help with networking. Note: This is different than a recruiter or recruitment agency. The best outplacement firms focus solely on you by helpng to determine your ideal job, plot your job search, and brush up on your job hunting skills, but they will not be submitting you for jobs or advocating for you to receive a job. They may, however, hear of something through the grapevine and suggest you apply for it. They are coaches, essentially. It's something worth asking for your employer to procure for you. They can only say no. So sorry again & best of luck!
posted by katemcd at 9:44 AM on March 25, 2017
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Is there any bargaining power that you have here? Negotiating is harder in layoff type situations because they aren't just hoping you'll go away or trying to buy you off to avoid bad press or a lawsuit.
Will I take a larger-than-normal tax hit on the lump sum?
Your WITHHOLDINGS will likely be larger because of how tax withholdings are calculated but it will even out when you file your tax return if you were over-withheld.
Can I collect unemployment (USA, Arkansas) after being laid off (via "reduction in force")?
Yes, they will likely take into account the severance you got.
posted by magnetsphere at 1:41 PM on March 24, 2017 [1 favorite]