The following is a guest post by Steve, a 40-something year old reader and consulting client who is currently traveling the world with his family after a 20 year career in mass media. So many times we’re just too paralyzed to make a change because we just can’t see a path forward. It’s these stories that keep me so motivated!
As I write this, I’m sitting on a balcony sheltered by lush tropical leaves. I close my eyes to savor a gentle breeze that has just kicked up, caressing the trees and taking the sting out of another cloudless 95-degree day. I flick over to the Times to check out the latest on a monster winter storm that is shutting down the East Coast. Hmmm, maybe I should extend my time in Costa Rica to a third month.
Just a few months ago, I was one of those East Coast worker bees bracing for another winter of long commutes and office frustrations. But then something wonderful happened — I lost my job. Not in a careless or unfortunate way, but as the result of a deliberate, carefully considered strategy that took months to bear fruit in the shape of a six-figure redundancy package.
Two months on — as I spend my days here doing little more than reading, learning to surf, and exploring rock pools with my four-year-old daughter — I still have to pinch myself every time I see that another full paycheck has thumped into my bank account. And it horrifies me to think that I was on the verge of simply quitting.
My achievement owes a lot to Sam through his book How To Engineer Your Layoff and a subsequent phone session of one-on-one coaching. He suggested I write an account of how I did it – not to plug his services, but as a reminder to all you financially astute FS readers that you should NEVER, EVER quit a job and always try to negotiate a redundancy package, no matter how far-fetched it may seem to you.
My Why
It certainly seemed unlikely to me. Before I get into the nitty-gritty of how I did it, here’s a little background on my circumstances. I had been with my employer for close to 20 years, and overall it had been a very happy relationship. The job was high-profile, frequently stimulating and rewarding, and in a field of work that I loved and respected. It took me around the world, and the benefits were pretty good – by the end I had five weeks’ paid vacation a year, a salary north of $150,000, and was established as a senior employee whose work was highly valued.
But, increasingly, I couldn’t escape the reality that it just wasn’t capturing my imagination or making me as happy as it did in my 20s and 30s. In recent years I started to resent being tied to a desk in stuffy offices, ever more conscious that my time on this planet was finite and thus increasingly valuable — a feeling that was magnified by the birth of my daughter. Sam’s post on freedom vs. wealth sums up this tension that I and many others feel as we look to the second half of our lives.
I was harboring ambitions to take back control of my time and go freelance, even though I knew that – at least initially – I would probably only make about half my current salary and would lose valuable benefits like healthcare and 401k contributions. I seriously considered quitting but that seemed wasteful after putting in two decades of work, not to mention risky.
I knew that my employer – a big, multinational company – did periodically give out redundancy packages. Every 5-10 years there would be a big purge of employees when the company was going through a tough time or a restructuring. But in normal times, they were usually only offered to “underperformers” – a category that I was not in, despite my waning enthusiam for the work.
What I needed was the confidence to broach the subject with my managers and the know-how to make the most of any opportunity for a lay-off that emerged. Enter Sam. After devouring his book and having an hour-long follow-up with him, I finally had the confidence and a clear strategy.
Here’s How It Played Out
– First, I reached out to a few former colleagues who I knew had got redundancy deals to get a feel for how the process had worked for them. This gave me some insights into what was possible. A conversation I had with a former manager who himself had overseen many redundancies was particularly valuable, as he gave me the tip that there was usually some money left over at the end of the year to pay for packages.
– I had an initial conversation with a manager – not my immediate boss but someone who I knew was a bridge between HR and upper management and with whom I was on friendly terms. I immediately played my main card — that I wanted to have time off to spend time with a close relative who was in failing health. I asked this in an open, curious way, seeking to draw out what my options could be from the company’s point of view. A months-long leave of absence or working remotely were the main options we discussed. But since the conversation was going well, I decided to bring up redundancy at the end as an outcome that I could be “open to.” I put forth one idea for how that could benefit the company, by allowing them to move my headcount to a higher-priority business area. We agreed to talk again after she had discussed it with the higher ups.
– When we reconvened a week or so later, she laid out the options: the company was open to giving me a leave of absence of up to three months or to allow me to work remotely, but redundancy was off the table as that was usually reserved for underperformers and they “didn’t want to lose me.” I hid my disappointment and said I’d consider the other options.
– A month later, I’d heard nothing more and was becoming resigned to the failure of my plot. How stupid of me to have thought anyone would hand me a small fortune to walk away! Then, out of the blue, my contact called me into a conference room. “Would you still be interested in that third option we discussed?” she asked. “Umm, yeah I think so,” I replied, struggling to hide my excitement.
– The rest was pretty easy. I talked through the package with the head of HR – it was a standard, but relatively generous deal that gave me nearly a year’s salary plus continued healthcare for the whole period. Before I knew it I was heading for my farewell drinks, feeling very bitter-sweet about leaving great colleagues and an employer that I still felt a lot of loyalty toward.
Keys To Swinging A Severance Package
Based on my experience, here are some of the keys to swinging a redundancy package. Sam goes into these points – and many more – in much greater detail in his book.
Confidence. The first step is to really believe it’s possible. I really struggled to believe my company would do this for me and had long worried that it might adversely affect my standing with management if I tried and failed. But the truth is that in most cases you really have nothing to lose, and the chances of getting a deal are probably higher than you think once you start planting seeds of doubt in management’s mind about your commitment to the job.
It’s not personal. Again, this was a blockage for me. I’d been with my company for such a long time and generally been treated so well that it felt almost like an act of betrayal to angle for a “golden parachute” while I was still in my prime working years. Despite that emotional attachment, the cold truth is that my company – like all others – is overwhelmingly concerned with the bottom line and its reputation. It wouldn’t have hesitated to kick me to the curb in an instant if either of those were under threat. Also bear in mind that companies, especially larger ones, have a keen interest in making sure that employees leave on good terms and don’t start griping about its problems on social media or in the press. In the end, my departure was a win-win for my employer and me because it helped the company meet a budget and personnel goal without having to force redundancy on someone else.
Leverage the law, but don’t push it. By international standards, the U.S. is a very employer-friendly place when it comes to workers’ rights. But there are still some effective legal buttons that the canny redundancy seeker can push. In my negotiations, I steered clear of raising my right to family-related unpaid leave to avoid coming across as antagonistic. Just hinting that I knew my rights and being inquisitive about a leave of absence was enough. Few employers really like letting a worker take a prolonged leave as it tends to throw their plans into uncertainty.
Have a solid post-redundancy plan in place. Leaving a long-term job can be disorientating, even if it’s done on your own initiative. Taking a big vacation is, quite rightly, the first thing on many people’s mind. There are few things better – as I can now attest – than being paid to play on a gorgeous beach for weeks on end. But my experience is that after a while vacations can start to feel like work, especially when caring for a 4-year old is part of the package. And it isn’t long before some anxiety starts to creep in about the income cliff you are facing at the end of the redundancy period.
That’s why it’s important to have thought past your well-deserved break to your next move from a professional and financial perspective. In my case, I had amassed a solid amount of savings and established a passive income stream of over $35,000 a year (nearly half of my annual expenses), which gave me confidence that even in a worst-case scenario my family and I wouldn’t end up on the streets.
I’d also sounded out several contacts about freelance work, giving me confidence that I could at least get paid enough on a part-time basis to pay the bills. Between Costa Rica and Europe, I’m taking a three-month vacation — about a third of my total redundancy period — before returning home to seek new work prospects.
It’s early days and there are certainly some lingering fears I have about giving up a chunky salary and trying to reinvent myself. What if the stock market crashes and damages my nest egg? What if my family healthcare costs shoot up? What if my skills are not as marketable as I hope? But I firmly believe that our fears about financial failure tend to be overblown. Hell, if it comes to it I can always drive an Uber — or just move to Costa Rica!
We plan to work on trimming our expenses over the next year and investing more in real estate platforms to further narrow the income gap. If I can make just half my previous income and gain the flexibility to spend more time with family and friends by working remotely, I will consider the redundancy move a roaring success.
– Steve
I love hearing success stories like this. I have a feeling when the market pulls back that a lot of people are going to wish that they would have taken the leap while they could instead of holding on tight and being asked to leave without anything. So I definitely think negotiating your severance on your timing is much much better :)
It’s definitely more beneficial to negotiate when you are in a position of power. It’s just like trying to get a better job offer while you have a job, instead of while you are unemployed.
Sam, this is a great story, with a great outcome. But I work for a small company, I doubt they ever give more than 4-6 weeks of severance pay, and certainly no ‘large lumps’. Do you or anyone have any stories from small companies? Thanks!
I do. With small companies, it’s even easier to have a discussion to get a severance package. But, WARN Act pay is different from severance pay.
See: https://www.financialsamurai.com/when-a-severance-package-is-not-a-severance-package/
Mr. Tamale,
I own a small company (20 employees) and I will do severance packages for key employees. If they are really valuable I will give them 2 weeks pay for every 1 extra week they stay and train there replacement.
In small businesses key people are extremely valuable. If you are one of those key people an employer would be crazy not to offer something to stay a little longer.
From my standpoint, the biggest reasons more employees don’t get a severance is because they don’t ask.
Thanks, Bill
Thank you so much for sharing the story. I haven’t thought about negotiating with my current employer about a severance package yet. Just thinking about it makes me anxious.
I’m glad to hear that your strategy worked out. I’m definitely keep it in mind for the future. :)
It’s a difficult conversation for sure, which is why I’ve set up a framework to help people navigate through this touchy subject. Hope this post helps highlight some good strategies.
Thanks for the post Steve! Enjoy your vacation and time with family in good health!
Congratulations Steve! I’m so glad to hear things worked out for you. It can take patience and persistence with these types of situations and both paid off nicely for you. I too was able to negotiate a severance from my previous job and am so grateful. I remember not thinking it would be possible for a while but once I realized all of the things I had going in my favor and how my former company would also benefit, things just started clicking into place. Congrats again and best of luck in your new chapter!
Thanks for sharing Steve and congrats on the great package. What type of freelancing are you planning? Something similar to your prior job or something brand new?
Thanks for posting about your experience. It seems almost impossible that this could work for me but I will definitely be giving it a try when the time comes.
So what exactly changed their mind? They realized they were having a bad quarter and would need to lay someone off?
Most people who end up negotiating a severance package think before they start it is impossible.
But that’s the same thing with many things when you look back. I certainly didn’t think I could grow FS to this size now. No way in my wildest dreams.
EVER company has cost cutting / optimizing measures every year. To not always look at ways to improve the P&L is a sign of a bad manager.
Well let us see what happens. I just purchased your book. My wife is quitting in a few months so let’s see if she can get paid to do it. I will let you know how it goes.
Good luck. The Finance Patriot on Twitter tweeted out on Christmas the book helped him receive a $50,000 severance. Not bad I see! Your mileage may vary.
Thanks for the post Steve. All the best. Please follow up six month/one year from now with an update on your transition, would love to hear that part also.
Glad to see you were able to pull it off, Steve. I’m in the midst of “planting seeds” myself, hoping for a “package” before I FIRE in June 2018!
Like you I’ve worked for my current employer for a long time, have generally been treated well, and my company is large. So it was extremely interesting to hear how you negotiated your farewell – it gives me hope that what seems impossible may not in fact truly be so. Just thinking about having that conversation makes my stomach hurt sonething fierce though!
Great story! It goes back to the simplicity of, if you don’t ask then you will never know. So always negotiate. I am glad to see that Sam’s book helped another person get a nice package on their way out the door!
Interesting – I wish I had known of this site when I left my last long-term job. I would have tried to negotiate a severance as well.
Thanks for the story and good luck!
Congrats on the package! My brother’s old boss was recently let go because their company as bought out by a larger one. So he got a HUGE severance package well in the six figure range. He threw a party and said he’s basically chilling right now and will take his sweet old time to find the next opportunity.
Everytime I read about these severance stories I can’t help but feel it’s a bit like “the rich get richer”. It always seems to be people earning six figures, in large, successful corporations, having worked there most their life. I can’t imagine a regular salary employee who has worked for 5 years for a small to mid size company getting anywhere in a potential severance negotiation. I know if I attempted anything like that my company would just laugh.
I hope you don’t take offense and I’ll probably sound like a dick anyway, but based on your current comment, and your previous comments about giving up on your blog and being upset at the Vancouver real estate market for all these years, I suggest you read these two posts:
Abolish Welfare Mentality
Create An Abundance Mindset To Grow Your Wealth
I know things can be hard and unfair sometimes, but know that you have more power to change your well-being than you know.
Thinking someone who makes $150,000 a year in an expensive city after 20 years as “the rich get richer” is a very self-defeating attitude. 20 years at one shop is a very admirable time period, and one I think you will appreciate once you get to the 10 year mark.
Your company will laugh at you if you don’t learn how to properly approach the subject and communicate. Try to look at things with an open mind while in your 20s and early 30s.
Here’s another relevant post: Why Negotiating A Severance Is Possible: Absolute Reputational Destruction
Good luck with your CFA studies! Just make sure that once you pass level III, to commit to working at least 10 more years to make it worthwhile.
Whilst my mindset might be skewed by a self defeatist attitude, yours is also skewed from living in one of the wealthiest cities on earth, surrounded by millionaires who all earn $150,000+ a year working for mostly public companies and getting severances by simply mentioning one to HR (as above).
I’d love to see someone earning $60,000 working for a small to mid size company in the Midwest go and negotiate a severance package of a years salary, but it isn’t going to happen and if it does it’s highly unlikely. You can say that’s defeatist if you like, I consider it realistic.
Are you sure you’re not projecting your own situation and frustration living in Vancouver, where the median home price is 1.3 million, or 15% higher than San Francisco?
I’ve highlighted three examples in my book profiling people making under $100,000 who successfully negotiated a severance. Let me schedule a post to share their story as well and I’d love to hear your feedback once they are posted! Hopefully you will be happier that lower income people are finding their freedom as well.
Find a way to believe in yourself. Because if you don’t believe in yourself, people can tell, and nobody else will.
Ps Steve doesn’t live in SF.
“I can’t imagine a regular salary employee who has worked for 5 years for a small to mid size company getting anywhere in a potential severance negotiation.”
“I’d love to see someone earning $60,000 working for a small to mid size company in the Midwest go and negotiate a severance package of a years salary, but it isn’t going to happen and if it does it’s highly unlikely.”
No matter how unlikely, I feel like you’re talking about me. Although I did not get to negotiate a severance package upon my departure, I was able to negotiate other things and I quickly doubled my salary soon after. As someone who used to earn $60k with 5 years of experience working for a small to mid size company (50-250) in the Midwest. I, too, thought I would be laughed at. I haven’t quite achieved my freedom yet, but I am still engineering my path forward. I applaud these success stories and they continue to motivate me and I feel truly happy for others who have succeeded in their journey.
TLDR don’t be a Negative Nancy
“Although I did not get to negotiate a severance package upon my departure…”
This is the point at which your argument became irrelevant. The discussion was simply about severance, not how much your salary might increase upon quitting a job (which frankly is entirely dependent on many many factors)
VB, you say this isn’t going to happen but if it does it is highly unlikely. That’s not being a realist, that is being pessimistic. The realist knows it may be harder for someone with short tenure, but also knows not to dismiss it outright.
I don’t think Sam or Steve are saying this is easy, or that you just walk in ask for a package and HR says “Yes certainly, how much will satisfy you”. Instead what I do here them saying is:
a) what do you have to lose
b) be prepared and go in with a strategy
c) act professionally, it only helps increase you odds
Vancouver Brit – What are some of the things that happen in your life that have made you so salty? Thank you
Funny. I used to make 60k in the midwest. I wanted to move, asked for a layoff with severance and they said no. I quit anyway and moved on my own dime to a larger city. Told contracting agency my previous salary and they paid me 65k. Hopped jobs then hopped again and within a year was a self employed contractor in the six figures.
When that gig expired went back to the SAME contracting agency with my new rate and from then on have always been around six figures currently at 150k.
My point is its possible to hop to a six figure income in a year. Once anyone pays you a higher salary, its easier to justify it to the next employer.
However, I still feel like 150k is middle class. Rich is where passive income exceeds expenses.
Not sure it’s really the rich get richer – it’s more like the most valuable employees will get more. 6 years ago, I was making less than $60k/year and probably could have negotiated maybe 4 months severance at most – probably 2 or 3 months. Today, I make more than 5x that, and could probably negotiate 6 to 12 months, namely that 1) I’m extremely well respected in my job 2) I’d be in a real position to say damaging things about the firm if I wanted to (I don’t, but it would be possible) 3) There are very few out there that do what I do, and no one internally, so dangling a carrot to hold on and train my replacement would be a huge win for my firm. 4) I have a significant amount of unvested stock that doesn’t really cost the company any cash and many add back to EBITDA anyway – employers seem to be a lot more willing to let these continue, especially if you agree to consult as needed for a period of time. 6 years ago, I had a lot of #1 but not nearly as much as #2 or #3 and none of #4
Unfortunately for me, I’m about 7-8 years out from the nest egg I want to retire and pulling the trigger on this.
Whoah. 5x salary in 6 years is impressive. Are you in a highly specialized field or is this a management position?
Combination of a number of things – being underpaid relative to what I was doing, performing at a top level each new job I got with minimal training, getting my MBA on the weekend, changing companies & leveraging another job offer another time, and coming up with a few multi-million dollar ideas for a couple different companies along the way. I’m now in corporate finance (VP level) for a small/mid cap company in the Southeast. I was in retail corp ops management 6 years ago.
Great post! I’d love to hear a 1 year update to see how things are going for Steve.
Also, I second what the Tepid Tamale said above. I work for a company with about 150 employees – how likely is it that small-mid sized companies would allow a redundancy package like this?
If your employer has over 100 employees, you at least get WARN Act pay.
The Worker Adjustment and Retraining Notification Act (WARN) was enacted on August 4, 1988 and became effective on February 4, 1989.
General Provisions
WARN offers protection to workers, their families and communities by requiring employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs. This notice must be provided to either affected workers or their representatives (e.g., a labor union); to the State dislocated worker unit; and to the appropriate unit of local government.
Employer Coverage
In general, employers are covered by WARN if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week. Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular Federal, State, and local government entities which provide public services are not covered.
Employee Coverage
Employees entitled to notice under WARN include hourly and salaried workers, as well as managerial and supervisory employees. Business partners are not entitled to notice.
What Triggers Notice
Plant Closing: A covered employer must give notice if an employment site (or one or more facilities or operating units within an employment site) will be shut down, and the shutdown will result in an employment loss (as defined later) for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice (discussed later).
Mass Layoff: A covered employer must give notice if there is to be a mass layoff which does not result from a plant closing, but which will result in an employment loss at the employment site during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33% of the employer’s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice (discussed later).
An employer also must give notice if the number of employment losses which occur during a 30-day period fails to meet the threshold requirements of a plant closing or mass layoff, but the number of employment losses for 2 or more groups of workers, each of which is less than the minimum number needed to trigger notice, reaches the threshold level, during any 90-day period, of either a plant closing or mass layoff. Job losses within any 90-day period will count together toward WARN threshold levels, unless the employer demonstrates that the employment losses during the 90-day period are the result of separate and distinct actions and causes.
Sale of Businesses
In a situation involving the sale of part or all of a business, the following requirements apply. (1) In each situation, there is always an employer responsible for giving notice. (2) If the sale by a covered employer results in a covered plant closing or mass layoff, the required parties (discussed later) must receive at least 60 days notice. (3) The seller is responsible for providing notice of any covered plant closing or mass layoff which occurs up to and including the date/time of the sale. (4) The buyer is responsible for providing notice of any covered plant closing or mass layoff which occurs after the date/time of the sale. (5) No notice is required if the sale does not result in a covered plant closing or mass layoff. (6) Employees of the seller (other than employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week) on the date/time of the sale become, for purposes of WARN, employees of the buyer immediately following the sale. This provision preserves the notice rights of the employees of a business that has been sold.
Employment Loss
The term “employment loss” means:
(1) An employment termination, other than a discharge for cause, voluntary departure, or retirement;
(2) a layoff exceeding 6 months; or
(3) a reduction in an employee’s hours of work of more than 50% in each month of any 6-month period.
Exceptions: An employee who refuses a transfer to a different employment site within reasonable commuting distance does not experience an employment loss. An employee who accepts a transfer outside this distance within 30 days after it is offered or within 30 days after the plant closing or mass layoff, whichever is later, does not experience an employment loss. In both cases, the transfer offer must be made before the closing or layoff, there must be no more than a 6 month break in employment, and the new job must not be deemed a constructive discharge. These transfer exceptions from the “employment loss” definition apply only if the closing or layoff results from the relocation or consolidation of part or all of the employer’s business.
Exemptions
An employer does not need to give notice if a plant closing is the closing of a temporary facility, or if the closing or mass layoff is the result of the completion of a particular project or undertaking. This exemption applies only if the workers were hired with the understanding that their employment was limited to the duration of the facility, project or undertaking. An employer cannot label an ongoing project “temporary” in order to evade its obligations under WARN.
An employer does not need to provide notice to strikers or to workers who are part of the bargaining unit(s) which are involved in the labor negotiations that led to a lockout when the strike or lockout is equivalent to a plant closing or mass layoff. Non-striking employees who experience an employment loss as a direct or indirect result of a strike and workers who are not part of the bargaining unit(s) which are involved in the labor negotiations that led to a lockout are still entitled to notice.
An employer does not need to give notice when permanently replacing a person who is an “economic striker” as defined under the National Labor Relations Act.
Who Must Receive Notice
The employer must give written notice to the chief elected officer of the exclusive representative(s) or bargaining agency(s) of affected employees and to unrepresented individual workers who may reasonably be expected to experience an employment loss. This includes employees who may lose their employment due to “bumping,” or displacement by other workers, to the extent that the employer can identify those employees when notice is given. If an employer cannot identify employees who may lose their jobs through bumping procedures, the employer must provide notice to the incumbents in the jobs which are being eliminated. Employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week are due notice, even though they are not counted when determining the trigger levels.
The employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.
Notification Period
With three exceptions, notice must be timed to reach the required parties at least 60 days before a closing or layoff. When the individual employment separations for a closing or layoff occur on more than one day, the notices are due to the representative(s), State dislocated worker unit and local government at least 60 days before each separation. If the workers are not represented, each worker’s notice is due at least 60 days before that worker’s separation.
The exceptions to 60-day notice are:
(1) Faltering company. This exception, to be narrowly construed, covers situations where a company has sought new capital or business in order to stay open and where giving notice would ruin the opportunity to get the new capital or business, and applies only to plant closings;
(2) unforeseeable business circumstances. This exception applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required; and
(3) Natural disaster. This applies where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought or storm.
If an employer provides less than 60 days advance notice of a closing or layoff and relies on one of these three exceptions, the employer bears the burden of proof that the conditions for the exception have been met. The employer also must give as much notice as is practicable. When the notices are given, they must include a brief statement of the reason for reducing the notice period in addition to the items required in notices.
Form and Content of Notice
No particular form of notice is required. However, all notices must be in writing. Any reasonable method of delivery designed to ensure receipt 60 days before a closing or layoff is acceptable.
Notice must be specific. Notice may be given conditionally upon the occurrence or non-occurrence of an event only when the event is definite and its occurrence or nonoccurrence will result in a covered employment action less than 60 days after the event.
The content of the notices to the required parties is listed in section 639.7 of the WARN final regulations. Additional notice is required when the date(s) or 14-day period(s) for a planned plant closing or mass layoff are extended beyond the date(s) or 14-day period(s) announced in the original notice.
Record
No particular form of record is required. The information employers will use to determine whether, to whom, and when they must give notice is information that employers usually keep in ordinary business practices and in complying with other laws and regulations.
Penalties
An employer who violates the WARN provisions by ordering a plant closing or mass layoff without providing appropriate notice is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days. The employer’s liability may be reduced by such items as wages paid by the employer to the employee during the period of the violation and voluntary and unconditional payments made by the employer to the employee.
An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. This penalty may be avoided if the employer satisfies the liability to each aggrieved employee within 3 weeks after the closing or layoff is ordered by the employer.
Enforcement
Enforcement of WARN requirements is through the United States district courts. Workers, representatives of employees and units of local government may bring individual or class action suits. In any suit, the court, in its discretion, may allow the prevailing party a reasonable attorney’s fee as part of the costs.
Information
Specific requirements of the Worker Adjustment and Retraining Notification Act may be found in the Act itself, Public Law 100-379 (29 U.S.C. 210l, et seq.) The Department of Labor published final regulations on April 20, 1989 in the Federal Register (Vol. 54, No. 75). The regulations appear at 20 CFR Part 639.
General questions on the regulations may be addressed to:
U.S. Department of Labor
Employment and Training Administration
Office of Work-Based Learning
Room N-5426
200 Constitution Avenue, N.W.
Washington, D.C. 20210
(202) 219-5577
The Department of Labor, since it has no administrative or enforcement responsibility under WARN, cannot provide specific advice or guidance with respect to individual situations.
What I find interesting is the company I worked for dropped the “WARN” term a few years back and called it “Reduction in Workforce” or what the managers called “RIF”…meaning reduction in force. But it was the exact same thing as WARN and essentially a 60 day notice that you are at risk of being laid off.
This happened to me last May. I had to sign a waver electronically to get the “Layoff Benefit Plan” which was 6 months pay in either lump sum or income continuation.
The waver had nine line items that was very legal in nature about what I would not do.
Very large company—150,000 employees. Now that I look back it allowed me to retire at 55 and also retain my pension and retiree medical. Although I did NOT negotiate it the outcome was pretty close to the poster here. Chao.
Awesome story I hope to be able to emulate in a couple of years. I’m right at the point where the investments really pick up steam and compounding really starts to accelerate. Looking forward to joining you in the near future!
Hi all. This is Steve, the poster. Thanks for all your supportive comments and I’m glad my story serves as something of an inspiration for others to escape a work situation they’re fed up with.
As an update to my fortunes, I’ve been back home for the past six weeks and embarking on my new freelance career. It’s been interesting in that many of the things I expected to be easy have proven hard, while other things have fallen into my lap out of the blue – the kind of serendipity that occurs when you leave your routine and spread the word that you are available.
Through a former colleague who now runs his own firm, I have work that pays well, only requires a laptop and wifi connection, and only demands a fraction of the time I used to spend at work. With this bringing in at least $3k a month, my main goal has been achieved — my family won’t starve!
I still have four months of redundancy pay to go so I still have a good cushion as I work my connections to find more gigs. One unexpected – but totally foreseeable — downside is that now I no longer have a big company and impressive title, people are less willing to take my calls. I’ve been “ghosted” by people who I had really expected to help me find some work. I’ve needed to hustle for the first time in two decades, but this is a useful skill to develop.
Another challenge (and Sam has written about this too) is dealing with being at home and often relaxing during the day while the whole world seems to be working their ass off. I’m starting to miss the daily human contact that I had in the office, even if few of those contacts were particularly deep or nourishing.
As I build my freelance work, I’d like to find some gigs that bring me more into contact with people. Overall, though, no regrets. I’m really enjoying the entrepreneurial aspects of freelancing, the physical freedom, and the not knowing what next week is going to bring.
I was offered a full-time job last week but turned it down, mostly because I’m not ready to go back to an office yet, if ever. Thanks Sam!
Related: How to Be A Rockstar Freelancer
Hi Steve,
Very cool. I found being freelance great in terms of autonomy but fully understand the loneliness aspect. I’d work on my stuff all day and then bombard my girlfriend with chatting when she got home haha. Realistically, I needed a daily interaction to look forward to during the day in order to cope – you set up coffee chats that get you out and about with people that may provide work-related benefits, but I found that these were too hollow for the social aspect. What worked much better was interacting with people that were also building a business, or that were just interesting and having a chat that was exciting, this kept me far more enthused. I needed to work with a cool tribe, otherwise I got cabin fever.
Then on an aspect in the story, you mentioned raising with HR that you had an unwell relative to care for as part of the discussion, is that a strategy or is there someone?
See: Use The Family And Medical Leave Act To Negotiate A Severance Package
Hi Joe, in my case there was indeed an ailing family member. But if there wasn’t, I wouldn’t have hesitated to make one up ;) I hear you on the social downside of this. I’m on the introverted side and don’t need that much interaction, but am still falling short in my current routine. Who knew that all those inane water cooler/coffee machine chats were actually serving a purpose!
Hey Steve,
You point out how it “feels strange” that someone would pay you to leave, and I completely feel this way. However, what do you think are the main points that give you leverage the in the severance negotiation? Obviously it seems to me the longer you have been with a company the more leverage you have, but what are some of points of leverage a more junior employee may have?
Steve, congrats on executing this so well. Enjoy it!
Man I’d love to know what the back channel conversations were that made HR change their mind and offer you a redundancy package. But it makes sense… if they know that’s an option you were wanting/hoping for, they have to start questioning your loyalty, performance, etc. Not to say you’d slack off, but who wants an employee that doesn’t want to be one any longer?
Best of luck to you and your future.
Awesome story.
Sam, how about somebody who s a consultant or contractor, or has relatively short tenure at a company,aybe only five years or so… Have you seen success in those situations?
I’m nowhere near being able to leave the corporate world but know that when I am ready it will be under those circumstances almost certainly.
Sam,
I wonder whether your method would also work for folks who work for federal government.
You guys are really on to something.
Congratulations! My company has a pretty strict severance policy. It primarily consists of some matches, a stick, and a knife, and then they drop you in the Amazon naked. Oh, wait, that’s a show. My company’s policy is much stricter. Any advice?
Yes! Start thinking about your exit strategy now, long before you actually do it. Build a network of supporters so that when the time comes, you’ll have a much easier conversation.
Too many folks wait until they are MISERABLE to then find a way out. Find a way out now when you are just uncomfortable.
Great article. I was with a company for 5 years before a change of management team and an economic downturn resulted in the new guy restructuring the team which I was part of. After a couple of dodging manouver where i bide my time for 4 months and being equally nasty and playing the victim to them, eventually they decided the that unwanted publicity and the possible labor law might be too much a hassle. I managed to negotiate a pay off of 3 months paid leave. Not a lot but better than walking off with nothing. Whatever your strategy, work on goal towards having a cash buffer of a few months to tie u during your job search. Now with a bigger cash buffer, I value peace of mind and happiness above all else. Oh I still cut on lifestyle inflation and unnecessary expenses and still focusing on passive income
Great article, I am in the exact same boat right now, got a package, have passive income, considering freelance and weighing jumping back into the job market. These stories let me know there are others who share my experience and outlook and that in the end our fears really are overlown when it comes to our working future.
Hi Sam
Great story!! After reading your Blog (sorry did not buy the book-ouch) I executed an awesome exit deal. Beforehand, I was ready to quit and get nothing!!! I can’t believe I was about to leave money on the table. Doh!! Your process really did work!! Let me know if you want the blow by blow details? Thanks again and keep up the good work on the blog
What a great story! Congrats, Steve! Were there any stipulations in your severance deal? When Sam left, he had to agree not to work for the competition and being his clients with him. Did your package have any similar provisions?
Sam, thanks for posting a story like this. It’s nice to see that it IS possible to “win” in the corporate game sometimes.
Sincerely,
ARB–Angry Retail Banker
Thanks, Arb. No, there was nothing like that in mine. I didn’t have any clients as such.
Hi Sam,
I bought your book and implemented my plan a few months ago. There are significant layoffs happening across the company. I let him know that my new wife and I wanted to be closer to her aging parents, and the 7 hour flight back and forth limited the amount we could see them. I couldn’t afford to just quit, but would be open to a layoff given the pressure to cut expense everywhere. A few weeks later, my manager said he couldn’t do it, and if even if they were for me, they needed the position to backfill. I’ve been here for 5 years with the desire to exit for the last 3. I’m thinkIng of leaving in 2 months anyway, any ideas on what to do anyway?
Hi,
The book suggests looking into company sabbatical policy. If you don’t have one, attempt to take an unpaid LOA, this will pressure your employer into paying you off.
I had very little pushback, but if I did, I would have gone nuclear.
Hey Sam, always interesting articles. I’ve found that I have only lightly paid attention the the articles about severance packages because I work in a healthcare (paramedic and nursing) and have never really thought it was something possible to get in my type of position. Have you heard of people in the healthcare sector (excluding physicians) who are involved in patient care being able to negotiate a severance? I figure that I have nothing to lose in trying, so I might as well research it. Thanks again for all the posts!
Hi Steve,
I am curious about your passive income. Is it stocks, real estate, bonds?
Is it recession proof? How long did it take to establish it?
It’s pretty conservative mix of those 3 things, more weighted towards real estate. I think it’s fairly market-correction proof, though not sure about a full-on recession. I’ve been saving consistently for 15 years but only really got serious about building passive income in the past 5.
Congratulations Steve, I wish we can read more success stories like this. What if they offered a much lower payment? Would you accepted it or rather waited for a while?
Love hearing these stories. Thanks for sharing them. Definitely intriguing. I’m already a contractor so it does not currently apply to me, but I can use similar thinking in the business I am building. Some clients could be let go with a severance if having them around is too much effort in this market.
Sam,
Why not use the FMLA and then ask for severance because as I understand FMLA is not a once in a lifetime option. So you can have the best of both worlds. Or am I missing something?
Congratulations on the successful severance negotiation! I just got back from a long-awaited, but short vacation in the Caribbean, so I fully appreciate how amazing spending a few months in Costa Rica must be.
Just curious, has anyone here ever negotiated a settlement from a law firm? I’m wondering what my options might be a few years down the road when I’m ready for financial independence. I work at a large law firm, so I feel my chances for getting something are decent, but I’ve just never heard of an attorney getting severance without some type of potential protected class claim (age, gender, etc.). I’ll be a young white male, so my chances in that department would be nill. haha.
Thanks!