Businesses and workers need Coronavirus Furlough and Layoff Strategies
The pandemic has challenged the traditional work environment, and we all hope for a return to “normalcy” — whatever that will look like.
According to the U.S. Department of Labor, a staggering 43 million-plus unemployment claims were filed over the past few months. With claims previously as low as 3.4%, our nation jumped to an unimaginable 14% in April and was down to 13.3% in May. Although layoffs and furloughs will level off, what do you do once you are out of work with dismal job prospects?
The pandemic forced companies to tighten spending, and many that had to furlough employees permitted them to retain employee status. Many companies continued to provide health care benefits and some level of guaranteed job protection once furloughs end.
Basic tips for surviving a furlough or layoff:
- File for unemployment.
- Update your resume.
- Consider any full- or part-time job.
- Evaluate cash and savings.
- Cut back on spending and defer where possible without penalty, such as your 401(k).
- Cash in vacation time and/or cancel your vacation.
- Postpone extracurriculars like gym memberships, cable, kids activities.
- Reduce discretionary spending on services such as housekeepers and gardeners.
- Reevaluate monthly subscriptions.
- Only food shop when necessary and go with a list.
- Cook, do not eat out. Eat leftovers. Brown bag lunches only.
- Only use credit cards when necessary, take advantage of credit card rewards.
- Get sound financial advice to avoid damaging your credit.
- Learn to prioritize spending habits.
Unfortunately, some may resort to hasty decision making and may even panic. Avoid losing hope, quitting your job, complaining to your boss and coworkers that you have too much work, and/or spending frivolously. Tighten your belt and focus on the most important responsibilities in your life.
Our federal government created the stimulus bill known as the Coronavirus Aid, Relief and Economic Security Act (CARES). It provides billions in direct aid to people and businesses affected by the COVID-19 pandemic. But it also relaxes the rules for withdrawing your 401(k) and other retirement accounts.
First, the CARES Act allows new, penalty-free hardship distributions to anyone who meets specific requirements. The 1% penalty is now waived. Most people who have been furloughed will qualify. Qualifiers may take distributions — not exceeding $100,000 — from their 401(k) and would have three years to pay income taxes on the distribution. Check with your financial representative before making any decisions.
As always, with such a tenuous situation, an old saying rings true, “You can’t eat bricks!” So think wisely, spend sensibly, borrow without penalty, and pay it back timely. And, most of all, be flexible when seeking your next position and be more agreeable to the opportunity in front of you. Good luck!
StarStaff President and Headhunter Avery Plavin has been helping businesses expand their human capital for over 20 years. She offers contingency and retained staffing including permanent, temporary, and temp-to-perm. She has partnered with Fortune 100 companies, private entities and smaller businesses to help facilitate their staffing needs.
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