Money and Hard Times

The first week after a layoff.

A calm, day-by-day plan for the first seven days: the final paycheck, unemployment, health coverage, the 401(k), the bills, the family and the search.

The first week after a layoff is mostly paperwork and phone calls, and the order matters more than the speed. Two things run on a clock: unemployment, which the EDD asks you to file in the first week, and health coverage, which has a 60-day window. Everything else can be done calmly, one piece a day.

The one-page versions live in two guides: the first 30 days when income stops, for the money sequence, and free help most people don't know to ask for, for the programs worth calling. This article is the week in between.

Day 1: the last paycheck and the paperwork

In California, a worker who is laid off or let go must be paid all wages owed at the time of termination, including accrued vacation. That rule comes from Labor Code sections 201 and 227.3, as the Labor Commissioner explains. If an employer willfully pays late, it can owe a penalty of a day's pay for each day the wages are late, up to 30 days. If the final check does not come, contact the Labor Commissioner's office.

Before you leave, or by email the same day, gather:

The termination or layoff letter, or the date and reason in writing
Your last pay stub
Your health plan details and who to contact about COBRA
The name of your 401(k) plan and how to reach it

Day 1 or 2: file for unemployment

File on the EDD's UI Online. It is the fastest way, and the EDD asks people to file in the first week after losing work, because a late claim can mean late payments. The claim starts on the Sunday of the week you file. Every claim has a one-week unpaid waiting period, so the first payment covers less time than people expect.

According to the EDD's claim guide, weekly benefits run from $40 to $450, based on what you earned in a past 12-month period. You certify every two weeks that you are able to work, available and looking. Most people also get a form, the DE 8405, telling them to register on CalJOBS within 21 days. The CFPB notes that unemployment benefits are taxable.

If the EDD asks about severance or vacation pay, answer plainly. The EDD decides how it counts.

Day 2: health coverage

You have three main paths. Look at all three before the windows close.

Option	How to start	Deadline	What it costs
COBRA	The election notice from your employer's plan	60 days from when coverage ends or the notice arrives, whichever is later	The full premium, plus up to 2%
Covered California	coveredca.com	60 days before or after job coverage ends	Based on income; most enrollees get financial help
Medi-Cal	BenefitsCal or Covered California	Any time of year, if eligible	Based on income

COBRA keeps the same plan and doctors, usually for up to 18 months after a job loss, but you pay what your employer used to pay as well as your share. Federal COBRA applies to employers with 20 or more workers. If you worked somewhere smaller, ask the plan or HR what applies to you.

Day 3: leave the 401(k) where it is

When you leave a job, a 401(k) can usually stay in the plan, roll into an IRA or a new employer's plan, or be cashed out. Cashing out is the expensive one. The Department of Labor explains that a withdrawal is generally taxed as income, with 20% withheld up front, and if you are under 59 and a half, an extra 10% penalty usually applies. In its own example, which assumes a 22% tax rate, a $10,000 balance cashed out early shrinks to about $6,800. A direct rollover avoids the withholding.

The Department of Labor also warns that a distribution may affect unemployment eligibility, so check with the EDD before touching it. The CFPB adds the plain part: a withdrawal cannot be undone.

Day 4: budget triage

Write every bill on one page with its amount and due date. Then sort by what protects your home and your ability to work: housing, utilities, food, insurance, and transportation to a job. The CFPB puts child support and court-ordered payments in the must-pay group too.

Next, call before anything is late. Landlords, mortgage servicers and card companies have more options before a missed payment than after one. On the electric bill, check CARE, which takes 30 to 35% off at the big California utilities, and FERA, which takes 18% off for families just above the CARE limits. Skip payday loans. In California the equivalent annual rate on a typical one is more than 400%, according to the DFPI.

Day 5: tell the people at home

Tell your partner or the adults in the house the whole picture, numbers included. Kids need less: what happened in a sentence, what stays the same, and that the grownups have a plan. Give everyone one job, like a cheaper grocery list or a subscription to cancel. People handle hard news better when they can help.

Days 6 and 7: start the search, on a schedule

Treat the search like a part-time job with hours. Create a CalJOBS account and upload a resume. Find your nearest America's Job Center of California, which offers free career coaching, resume help, interview practice and training leads. Keep a simple log of every application and contact, since the EDD asks you to keep a record of your work search.

Watch for scams. The CFPB warns about job offers that ask for fees or personal information up front. A real employer does not charge you to apply.

By the end of the week, the claim is filed, coverage is chosen or scheduled, the bills are on one page and the search has a rhythm. That is a good first week.

Sources

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