Were You Laid Off? Everything You Need to Know About Layoffs and Your Rights

In today’s uncertain economic climate, layoffs have become a common yet devastating reality for many workers across the United States. 

Whether you’ve recently been let go or are concerned about potential job loss, understanding your rights and legal options can help you make the best next steps. 

Layoffs can help a company trim its workforce in difficult times. Unfortunately, what some employers call a “layoff” may simply be a wrongful termination due to discrimination, retaliation, or another unlawful act. If an employer wrongfully fires you under the guise of a layoff, you could be entitled to compensation.

At Morgan & Morgan, we have been fighting for workers’ rights for over 35 years and have recovered over $25 billion in compensation in the process. If you were wrongfully terminated, we want to hear about it. Contact us for a free case evaluation today.

What Is a Layoff?

A layoff is the termination of an employee’s position by an employer, typically due to reasons unrelated to the employee’s performance. These reasons can include:

• Company restructuring
• Financial difficulties
• Mergers or acquisitions
• Downturns in business or industry
• Outsourcing or automation
   

Unlike a termination “for cause” (such as for misconduct), a layoff is considered a no-fault separation. That means the employer acknowledges the employee is not at fault for losing their job.

While layoffs can happen for a variety of reasons, there are common key elements to them, which include:

• The position is often eliminated or consolidated
• It may affect multiple employees at once (mass layoffs)
• The separation can be permanent or temporary
• Employees may be eligible for severance pay or unemployment benefits
• Legal protections may apply, especially in large-scale layoffs
  
   

What’s the Difference Between a Layoff and a Furlough?

While both layoffs and furloughs are employment interruptions, the two terms mean very different things, especially when it comes to your legal rights and expectations as a worker.

Layoff

A layoff is generally considered a termination of employment, either temporary or permanent, due to reasons unrelated to the employee’s performance. Most commonly, layoffs occur because of:

• Company restructuring or downsizing
• Budget cuts or financial instability
• Economic downturns
• Mergers and acquisitions

In most layoffs, the employment relationship is considered ended, even if the company uses the term “temporary.” Employees typically stop receiving pay and benefits, and unless the employer indicates otherwise, there’s no guarantee of being rehired.

Laid-off employees may be entitled to:

• Severance pay (depending on company policy or contract)
• Unemployment benefits
• COBRA or continued healthcare coverage
• Final paychecks and accrued PTO payouts (as required by state law)
  
   

Furlough

A furlough, on the other hand, is a mandatory unpaid leave of absence — but the employee is still technically employed. Furloughs are often used as a cost-saving measure during difficult financial periods or seasonal slowdowns.

Unlike layoffs:

• Furloughed employees generally expect to return to work
• Benefits like healthcare often continue during the furlough
• The employee remains on the books and may not need to reapply for their position
   

Some common types of furloughs include:

• Reduced work hours or workweeks
• Forced unpaid leave for a specific time
• Seasonal shutdowns

While furloughed employees aren’t being paid, they may still be eligible for unemployment benefits, depending on state law and the specifics of the furlough.

What Is a Temporary Layoff?

A temporary layoff is when an employer lets an employee go for a short-term period, with the possibility (but not a guarantee) of rehire in the future. Unlike a furlough, a temporary layoff usually means:

• You stop working completely
• Your benefits may be paused or terminated
• You are typically eligible for unemployment
• You may need to reapply or be re-onboarded when work resumes

Employers use temporary layoffs when they expect operations to recover but need to reduce payroll costs in the interim.

Even temporary layoffs are considered terminations for legal and unemployment purposes in many states. That means your employer may be required to issue a formal separation notice and follow legal protocols.

Common Reasons for Layoffs

Understanding why layoffs occur can help you determine whether your separation was legal and fair. Common justifications include:

Economic Downturns

When consumer demand drops, employers often have to cut back on staff. The COVID-19 pandemic is a prime example of mass layoffs due to an economic crisis.

Corporate Restructuring

Mergers, acquisitions, or reorganizations can lead to duplicate roles, prompting layoffs.

Outsourcing

Jobs may be outsourced to third-party contractors or foreign labor markets to reduce costs.

Technological Advancements

Automation and software may make certain roles redundant, leading to layoffs.

Business Closure

In the worst-case scenario, the business shuts down entirely, resulting in the termination of all employees.

While these may be valid business reasons, employers still have a legal obligation to lay off workers fairly and without discrimination.

Your Legal Rights in a Layoff

Just because a layoff is common doesn’t mean it’s always legal. Federal and state laws are in place to protect workers during job loss, especially when it’s done unfairly or without proper notice.

WARN Act (Worker Adjustment and Retraining Notification)

The federal WARN Act requires businesses with 100 or more full-time employees to provide 60 days’ notice before:

• A mass layoff (usually 50+ employees at a single site)
• A plant closure affecting 50+ employees

Employers who fail to comply may owe you back pay and benefits.

Many states have their own “mini-WARN” laws that apply to smaller employers or provide greater protections.

Discrimination Protections

Your employer cannot use a layoff to discriminate based on:

• Age (40+)
• Race or ethnicity
• Gender or sexual orientation
• Disability
• Religion
• National origin
• Pregnancy

If you suspect you were singled out based on one of these protected characteristics, you may have a wrongful termination case.

Retaliation Protections

Were you recently involved in a complaint, whistleblowing, or union activity? If so, and you were laid off shortly after, that may be retaliation, which is illegal.

Severance Packages: What You Should Know

Not all employers are required to offer severance, but many do as a goodwill gesture or per company policy. A severance package may include:

• A lump-sum payment or continuation of salary for a set period
• Health insurance extensions (COBRA)
• Assistance with job placement or resume services
   

Be cautious before signing any severance agreement. These often include:

• Waivers of your right to sue
• Non-disparagement clauses
• Non-compete or non-solicitation agreements

If you’re offered severance, it’s a good idea to speak with an attorney before signing anything, especially if you suspect you were let go unfairly.

What to Do if You’ve Been Laid Off

A layoff can be emotionally and financially overwhelming, but taking the right steps immediately can help you protect your rights and recover faster.

Step 1: Get the Details in Writing

Ask your employer for a written termination letter that outlines:

• Your official termination date
• Reason for layoff
• Severance details (if any)
• Information about COBRA or health insurance
• Unemployment eligibility confirmation
  
   

Step 2: Apply for Unemployment Benefits

Each state has its own unemployment insurance program, but generally, laid-off employees are eligible if:

• They lost their job through no fault of their own
• They’re actively seeking new employment
• They meet base-period work and wage requirements
   

Check with your state’s Department of Labor for specific steps.

Step 3: Review Any Severance Agreement Carefully

You may be asked to sign legal paperwork in exchange for payment. Before you sign, have it reviewed by an employment attorney to ensure you aren’t waiving your rights or agreeing to unfair terms.

Step 4: Contact an Employment Lawyer

If you believe your layoff was discriminatory, retaliatory, or violated WARN or state laws, you should consult with a lawyer. Morgan & Morgan offers free case evaluations—you may be entitled to compensation.

Can You Sue if You Were Laid Off?

You may be able to sue if:

• You were laid off for discriminatory reasons
• Your employer violated WARN Act requirements
• You were laid off in retaliation
• Your employer violated your employment contract
• You were forced to resign (constructive termination)
   

A lawsuit could help you recover:

• Lost wages and benefits
• Emotional distress damages
• Punitive damages (in some cases)
• Attorney’s fees

At Morgan & Morgan, our employment law attorneys have handled thousands of wrongful termination and layoff-related cases. We fight tirelessly to make sure workers are treated fairly—because you deserve justice.

Morgan & Morgan Can Help

Losing your job is one of life’s most stressful experiences. But you are not powerless, and you are not alone. At Morgan & Morgan, we believe in standing up For the People, including those who’ve been treated unfairly at work.

If you suspect your layoff was illegal or unjust, contact us today for a free, no-obligation case evaluation. You don’t have to pay a dime to get started—the Fee Is Free®, and you only pay if we win.

Don’t let your employer get away with wrongdoing. Let us help you fight back.

Is a layoff the same as being fired?

No. A layoff is a no-fault separation typically due to business reasons, while being fired means termination for cause (misconduct or poor performance).

Being fired, also known as termination for cause, means your employer is ending your job due to your actions or performance. This might include:

• Repeated tardiness or absenteeism
• Failure to meet job expectations
• Policy violations
• Misconduct

Understanding whether you were laid off or fired is very important because it affects your reputation with future employers, your eligibility for unemployment, and whether you might receive severance pay.

It also is a factor in whether you can challenge the termination legally.

If you believe you were wrongfully terminated, either under the label of a layoff or firing, you may have legal recourse. Morgan & Morgan’s employment lawyers can evaluate whether your employer violated labor laws or discriminated against you during the process.

Do I have to accept a severance package?

No, you do not have to accept a severance package, and in some cases, you shouldn’t accept it without carefully reviewing what you're agreeing to. Severance packages often come with legal strings attached, and signing one could mean waiving your rights to sue your employer for things like:

• Wrongful termination
• Discrimination or retaliation
• Unpaid wages or overtime
• Harassment
  
   

What Is a Severance Package?

A severance package typically includes some form of compensation or benefits provided when an employee is laid off or let go. It may include:

• A lump-sum payment
• Continued health insurance for a period
• Payment for unused vacation/PTO
• Job placement assistance

But here's the catch: most severance agreements require you to sign a release of claims, which means you're giving up your right to pursue any legal action related to your employment or termination.

Why You Might Not Want to Sign Right Away

Even if the severance offer seems generous, you should never feel pressured to sign on the spot. Consider the following.

You may be owed more. If you were discriminated against or fired for an unlawful reason, the severance may be a lowball offer compared to what you're legally entitled to.

Also, the agreement might contain hidden clauses. These could include non-disparagement clauses, non-competes, or confidentiality agreements that limit your future opportunities.

Finally, you may have leverage to negotiate. Especially if the company wants to avoid litigation, you might be able to negotiate a higher payout or better terms.

 

What You Should Do Before Signing a Severance Package

Take your time. You're usually given at least a few days to review it—sometimes more, especially if you're over 40 (under federal law, older workers get at least 21 days).

Be sure to also read every word. Understand what you're signing away.

And of course, it never hurts to consult an attorney. An employment lawyer at Morgan & Morgan can review the package, spot red flags, and advise you on whether to accept or negotiate.

 

When to Contact a Lawyer

You should absolutely speak with a lawyer if:

• You feel pressured to sign quickly
• You believe your termination was unfair or unlawful
• You’re being asked to sign a non-compete
• You’re unsure what rights you’re giving up
   

At Morgan & Morgan, our employment attorneys can help you understand your severance agreement, negotiate better terms, and determine whether your termination was handled lawfully. 

Can I collect unemployment after a layoff?

Yes. In most cases, you are eligible for unemployment benefits if you were laid off through no fault of your own.

What if I’m rehired after a temporary layoff?

If you're rehired after a temporary layoff, that's generally good news, but it also comes with important legal and practical considerations. Here's what you should know if you're brought back to work after being temporarily laid off:

What Happens If I’m Rehired After a Temporary Layoff?

When a company temporarily lays off workers, there’s usually an understanding, whether formal or informal, that employees may be brought back when business conditions improve. If you’re rehired, it’s important to clarify your rights, benefits, and employment terms, because a return doesn’t always mean everything picks up right where it left off.

Do I Get My Old Position Back?

Sometimes yes, sometimes no. Employers might offer the same position with similar pay and duties, a new or modified role due to restructuring, or a lower-paying or part-time version of your old job.

Unless you have a union contract or employment agreement that guarantees reinstatement, the company usually isn't legally obligated to bring you back to your old job.

What Happens to My Seniority and Benefits?

This varies based on company policies, the length of your layoff, and state laws.

In many cases, your seniority and benefits (like 401(k) vesting or paid time off accrual) may be restored, especially if the layoff was brief. However, if too much time has passed or you're technically considered a new hire, you may have to start over with your benefit eligibility.

Ask HR the following:

• Will my seniority be reinstated?
• Is my original hire date preserved?
• What happens to my unused PTO or accrued sick leave?
  
   

What If My Pay or Job Title Changes?

Employers can change the terms of your employment upon rehire, but there are legal limits. For instance, if:

• You’re offered a substantially lower wage
• Your job duties are reduced in a way that could signal retaliation or discrimination
• You’re not being treated the same as other returning employees without a valid reason

You might have grounds to question the fairness or legality of the situation.

Can I Lose My Eligibility for Unemployment Benefits?

Yes. Once you’re rehired and earning wages, you’ll typically lose your eligibility for unemployment, and may need to report the change to your state’s unemployment office right away.

If you’re rehired part-time, you may still qualify for partial benefits, depending on your income and your state’s rules.

What If I Don’t Want to Go Back?

You are not required to accept reemployment. But be aware: turning down a job offer may affect your unemployment eligibility. If the job offer is considered “suitable” under your state’s rules, you could lose benefits.

Always speak with an employment lawyer or your state labor department before declining an offer if you’re collecting unemployment.

Know Your Rights When Rehired

Rehiring after a temporary layoff isn’t always straightforward. It’s important to get your new terms in writing and to ask about and clarify your seniority, benefits, and pay. Watch for signs of retaliation or unequal treatment, and know your rights when push comes to shove.

If something doesn’t feel right or if you suspect your layoff or return was handled unfairly, Morgan & Morgan is here to help. Our employment attorneys can review your situation and fight to protect your rights. Hiring one of our lawyers is easy, and you can get started in minutes with a free case evaluation.