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Managing Your Exit Strategy

By Jamie Fabian

Layoffs in this labor market are like musical chairs. You want to be one of those sitting down when the music stops. And there's no real way to predict when that music is going to stop. Whether there are clues about impending cutbacks or it comes as a shock - it's important to know how to manage the process of separation to your greatest advantage.

There's more to being laid off than finding an empty box to cart your stuff home. Assuming that you're being terminated because of a business downturn (and not for poor performance), you'll want to get the most support possible from your soon-to-be-ex-employer.

So long as the entire company isn't going belly-up, there's a good chance that some type of monetary compensation may be offered. If you're lucky, there may be some room to negotiate the amount. And, there are additional non-monetary considerations that will have a major impact on you as a job seeker. Here's how to make sure you maximize your control over the situation.

Separate Defensiveness from Self-Defense

Terminations are difficult all around. Layoff behavior options can range from a well thought-out process complete with extensive benefits package down to a mumbled statement from a manager who won't look you in the eye. But no matter how the message comes, the reality is still a gut-punch. The important thing is to separate your emotional reaction from your practical one.

Keep your wallow in self-pity short and keep your anger to yourself while at work. Acting like a professional will protect your long-term interests. Employers will be inclined to consider requests for more favorable terms of separation from calm and reasonable people ... as opposed to those who make threats and/or trash the office.

You'll need to think about severance, continuation of benefits, references, and any non-compete agreements, at the very least. A cool head and some advance knowledge of the layoff landscape will improve your position in this transaction.

Sign on the Dotted Line, Please

No matter what the final terms are, you should get them spelled out for both parties (company and separated employee.) You may need to initiate this yourself - but it's going to be a distinct advantage to have a record of the terms to which you both agreed. Sounds like it could be a job for a lawyer, doesn't it?

So I talked with Deborah Weinstein, member of the Labor and Employment department in the Philadelphia and Haddonfield offices of the law firm of Eckert, Seamans, Cherin & Mellott, LLC, to get her perspective and advice. According to Weinstein (also an elected member of the Board of Governors of the Philadelphia Bar Association and Employment Law Instructor at the Wharton School of the University of Pennsylvania), the critical elements in a separation agreement are severance, references, and non-compete agreements.

Contrary to popular belief, employers aren't legally obligated to provide severance. They do it to maintain their public image (useful for future recruiting) and to provide support for former employees. "But in many cases," says Weinstein, "the reason for severance is to ensure that laid-off workers release all claims against their former employers. You're trading a promise not to sue for a monetary payment."

Most employees - unless they're union members or signed an employment agreement for a specific term at the time of hire - are employees-at-will, she explained. That means either the employer or employee may terminate employment at any time for any reason or no reason at all, as long as it is not an unlawful reason (these vary by state but under federal law include discrimination because of age, race, sex, religion, national origin, or disability.)

A formal separation agreement usually includes a release of all claims arising out of the employment relationship. It is intended to head off any legal action in the event that the employee believes one or more of these reasons is behind the termination. And the severance payment is the incentive for signing the agreement. If you have concerns, consult a lawyer, or the U.S. EEOC or state human relations commission (the name of this agency differs by state; check your state dep't. of labor) before making accusations.

To get that severance payment, you'll need to sign on the dotted line. Employers protect themselves and you need to think about protecting yourself too. Says Weinstein, you can frequently negotiate to include other non-monetary stipulations that will also be helpful to you in your search for a new position.

Must-Haves

To avoid risk, many companies have a neutral reference policy. That means they only confirm dates of employment and job title at time of separation in response to a request for a job reference on an ex-employee. Not exactly a ringing endorsement, is it? At the very least, says Weinstein, you want the company to provide you with a reference letter stating that you were laid off for economic reasons, not due to poor performance. Providing such a letter should be included as a condition of any written agreement that you sign.

Non-compete agreements are a bit more difficult. Think back now ... was one included in any employment agreement you signed when you first took your now-about-to-be-ex-job? Don't trust your memory. Dig it up and read it over. According to Weinstein, the terms of this agreement are make-or-break for job search flexibility. Non-competes typically limit your ability to go to work for a competitor for a specific period of time and within a specific geographic distance. If that non-compete is enforceable as written, it can keep you out of the job market or force you to do something else with your career. However, according to Weinstein, to be enforceable, non-compete agreements must "protect the legitimate business interests of the company and be of reasonable scope with regard to length of time and geographic reach (distance)."

That means that an employer in one sector of the technology business shouldn't keep you out of all sectors. Or a company with a regional reach can't keep you from working outside that region. However, a properly written non-compete can restrict you from working for a direct competitor and/or from contacting your former employer's clients for a given period of time.

Don't just assume that you can ignore anything you previously signed or that your former employer is just making noise to scare you. Employers - even small ones - regularly go after ex-employees whom they perceive as threats to their business, when a non-compete is ignored.

Get Specific

Don't be discouraged by this potential damper on your job search. There's a counter-intuitive strategy for getting around it. You probably won't get the non-compete dropped - but you may be able to narrow it by adding to it in your separation agreement. That's right ... add detail to it to make it more specific:

  • Specify your occupation by outlining your previous job title and responsibilities.
  • Include a specific definition of the old company's business outlining exactly what the company was doing while you were there (but not including what it intends to do in the future)
  • Outline a list of particular competitors or customers who will be excluded from your job search or from any business development responsibilities for a new employer. If you worked for a large corporation, you should try to get this list limited to companies with whom you or your workgroup interacted directly, not the entire organization's competitors or customers.
  • Proposed the briefest time for the non-compete that you think your former employer will accept (3 months is about the shortest).

Nice-to-Haves

Companies with more than 25 employees who provide health benefits for remaining employees are required by federal law (COBRA) to provide laid-off employees with the option to purchase similar coverage for a period of up to 18 months after separation. If you previously had only a co-pay, you may be staggered by the monthly fees. The nice-to-have part of this is if your former employer can be persuaded to contribute something towards the cost of this coverage for you.

You may also be able to negotiate for the use of an office and equipment to conduct a job search for a period of time after separation. Sometimes employers will allow employees to keep laptops or other equipment. Or your ex-employer may be willing to contact its business partners on your behalf to help you approach them for possible employment opportunities.

Employers don't have to give you anything, but there may be some guilt there that can be exploited to your benefit if you play it right. Flies with honey and all that. Who knows? Someday, they may be the ones that need you back ...

More

I had planned to do this column for several months, but it turned out to be more than just an academic exercise. I got a pink slip last month, so I've been living through job search hell myself. Yes, I'm following my own advice, thanks for asking. And no, I don't like doing it any more than you do. If you're interested in hearing about my experiences, please email me at jamie@jobcircle.com. If I get enough responses, I might be persuaded to write a first-person account. Warts and all.

Jamie Fabian spent more than 15 years as a human resources executive before changing careers to become a senior project manager for a growing IT consulting company. Jamie would like to be seen as a hybrid of Tom Peters, Tom Jackson, and Tom Wolfe, but spends too much time working, driving carpool and watching mindless TV to write more than this column. You can contact Jamie with questions and comments at jamie@jobcircle.com.


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Copyright © 2003 Jamie Fabian

 
 
 


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