If you decide to quit your job, don’t expect to receive unemployment benefits. This is because the Employment Development Department (EDD) sees quitting as an indication that you don’t need financial assistance. On the other hand, if you’re laid off, you could be eligible for both unemployment benefits and possibly a severance package. I learned this firsthand in 2012 when I was laid off and received a severance that covered five years of my living expenses, along with 26 weeks of unemployment benefits.
Back in 2011, the U.S. Labor Department found that $14 billion in unemployment benefits were overpaid, largely due to inefficiencies in the system. This overpayment primarily affected three groups of people: those not actively looking for work, people who continued to claim benefits after returning to work, and those who were fired or quit voluntarily. If you fall into one of these categories and received benefits, the government will likely seek repayment.
The concept of “actively searching” for a job is somewhat ambiguous. It’s hard to define what counts as sufficient job search activity. Could a few emails or voicemail follow-ups suffice, or is more required? The rules are not always clear. For instance, it’s fraudulent to continue claiming unemployment benefits after you’ve returned to work. However, system inefficiencies can sometimes allow for a temporary overlap of employment and benefit collection.
The Labor Department is clear, though: if you’re fired or quit voluntarily, you generally won’t qualify for unemployment benefits. Quitting sends a message to your employer—and to the state—that you don’t need income support.
One personal story involved a friend who quit his tech job after four years because he was fed up. He thought he’d quickly find another job after traveling. However, 15 months later, he’s still jobless and has exhausted his savings, including his emergency fund. He’s now considering moving back in with his mother. Another friend quit a finance job to avoid the stigma of being laid off and missed out on a substantial severance package that her colleagues received just a month later. She regrets her decision, especially since she quit out of fear of confronting her boss and HR.
Given the significant government support for unemployment benefits during the pandemic, my advice is clear: don’t quit and end up with nothing. If you’re considering leaving your job, try to negotiate a severance package or line up another job first. This approach not only increases your chances of receiving severance but also ensures a smoother transition.
Through my experience and extensive research on this topic, I’ve found that pride, fear, and a lack of knowledge often drive people to quit their jobs prematurely. Employees typically have more rights and negotiation power than they realize. It’s vital to explore all options before deciding to quit or get fired. Proper negotiation can lead to outcomes like mine and my wife’s, where we negotiated six-figure severances and have not had to return to work since 2012 and 2015, respectively.
