Money after the job

1. Final pay

California is one of the strictest states in the country on this.

If you are discharged or laid off, Labor Code 201(a) says your wages are “due and payable immediately.” Not next payroll. Not within a few days. Immediately.

If you quit without notice, Labor Code 202(a) gives the employer 72 hours. If you gave at least 72 hours notice, your wages are due on your last day.

What final pay must include:

• All wages earned through your last day
• All vested vacation or PTO, paid at your final rate of pay. Labor Code 227.3 is explicit that vested vacation is wages and that a policy “shall not provide for forfeiture of vested vacation time upon termination.”
• Earned commissions, to the extent they are calculable
• Any other earned compensation

What it does not have to include: severance. Severance is a contract term, not a wage. That The distinction matters repeatedly below.

If it is late

Labor Code 203 provides a waiting time penalty: your wages continue at the same rate, as a penalty, for each day the payment is late, up to a maximum of 30 days.

This is not automatic. You claim it, typically by filing a wage claim with the Labor Commissioner using DLSE Form 1, the Initial Report or Claim. Note that filing a claim does not stop the penalty from continuing to accrue.

Wage claim deadlines at the Labor Commissioner vary by claim type: generally three years for unpaid minimum wage, overtime, meal and rest premiums, sick leave, illegal deductions and unreimbursed expenses; four years on a written contract; two years on an oral promise; and one year for failure to provide payroll or personnel records.

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2. Unemployment

File immediately. There is a one-week unpaid waiting period in California, so every day of delay is a day of benefits you do not get back.

How severance is treated

This surprises almost everyone, including people who have been through it before.

Under EDD’s own benefit determination guidance, severance pay is generally not wages for California unemployment insurance purposes, where it is paid under a company plan to a class or group of employees. That rule rests on the California Supreme Court’s 1965 decision in Powell.

Two other payments are worth knowing about:

• Vacation paid out when the job ends. Unemployment Insurance Code 1265.5 says vacation pay earned before termination is not wages, and benefits are not denied or reduced because of it. EDD says that if you have no return-to-work date, vacation pay you get when your job ends will not reduce your weekly benefits. On a temporary layoff with a return date, vacation pay for a specific week does reduce that week.
• Pay in lieu of notice, and ongoing salary continuation. EDD requires you to report them. How they are treated depends on the facts, so ask EDD rather than assume.

The practical instruction is simple: report everything you received, describe it accurately, and let EDD apply the rules. Do not decide for yourself that something does not count, and do not omit it. Accuracy protects you. An overpayment determination later is far worse than a delay now.

If you are denied

You generally have 30 days from the mailing date of the Notice of Determination to appeal. Late appeals require good cause. Read every EDD notice the day it arrives.

The hearing is a record, for both sides

If the employer contests your claim and the case reaches a hearing, treat everything said there as permanent, because it is. Testimony at an unemployment hearing is given under oath, and parties do obtain hearing transcripts later. A careless, emotional or inconsistent statement made in a small administrative hearing can be read back in a larger case to challenge your credibility. The details of what may be used, and how, vary by state, so treat this as a practice rule rather than a universal one: write every statement you send EDD, and say everything at any hearing, as if it will be read aloud in a different room a year from now. It may be. Keep your EDD statements short, factual and completely consistent with any claim you may later bring. If the two ever diverge, the divergence becomes the story.

The same record cuts the other way, and this part is worth knowing before you assume the employer holds all the cards at a hearing. In Cooper v. Starbucks Coffee Co., No. 15-AA-476 (D.C. Court of Appeals, June 6, 2017), a benefits denial was reversed because the employer’s proof of misconduct was a manager relaying what others had told him, plus an unsigned, unsworn letter. Hearsay of that kind was not substantial evidence of misconduct, and benefits were ordered. An employer who sends an unprepared witness, or relies on secondhand accounts and paper it cannot support with a live witness, can lose the hearing and lock its own witnesses into sworn testimony in the process. If the employer’s submission is questionnaires and letters rather than a witness who was actually there, that is worth pointing out, calmly, on the record.

Does signing a release affect eligibility?

Signing a severance agreement does not by itself make you ineligible. A layoff is generally a qualifying separation. Watch for one thing in the agreement: a clause in which you agree the separation was voluntary or a resignation. That characterization can matter, and it is worth raising before signing.

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3. Health coverage

You have two realistic paths, and the default is usually the expensive one.

COBRA

Continues your existing plan. Federal COBRA applies to employers with 20 or more employees.

• Election window: 60 days after notice or loss of coverage
• Duration: generally 18 months
• Cost: up to 102 percent of the full cost of the plan
• First premium generally due 45 days after election

The 102 percent is the shock. You have been paying a fraction of the real premium; now you see the whole thing plus a 2 percent administrative charge.

Cal-COBRA covers smaller employers, 2 to 19 employees, and can extend total continuation coverage up to 36 months in combination with federal COBRA.

Covered California

Losing job-based coverage opens a special enrollment period: 60 days before or after your coverage ends.

The important part: marketplace subsidies are based on your current expected income for the year, which has just dropped. For many people who have just lost a job, a comparable Covered California plan costs substantially less than COBRA.

How to decide

1. Get the exact COBRA premium from the notice.
2. Price comparable plans on Covered California using your realistic income for this year.
3. Check whether your doctors and prescriptions are in network on the alternative.
4. If you are mid-treatment or have met a deductible, COBRA’s continuity may be worth the cost.
5. Note that COBRA elected later is typically retroactive to the date coverage ended, so you often have room to compare without a gap. Confirm this for your specific plan.

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4. Retirement accounts

No emergency here, but a few decisions.

401(k): you can generally leave it, roll it to an IRA, roll it to a new employer’s plan, or cash it out. Cashing out before 59 and a half generally means income tax plus a 10 percent early withdrawal penalty, which is almost always the worst option. A direct rollover avoids mandatory withholding; an indirect rollover triggers 20 percent withholding and a 60-day clock.

Outstanding 401(k) loan: this one has a real deadline. An unpaid loan balance generally becomes a deemed distribution, taxable and potentially penalized, with a repayment window that runs to your tax filing deadline including extensions. If you have a loan, address it early.

Equity: your post-termination exercise window, usually 90 days for options, is set by your award agreement. Exercising has a real cash cost and real tax consequences, including possible AMT exposure for incentive stock options. See The tax of severance. Section 5 below works through equity in full.

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5. Equity

Equity is where a separation can quietly cost more than the severance is worth, because the rules live in the plan document and your award agreements, not in the separation letter, and the deadlines do not move. Start from one principle: vested does not mean cashable. It means the award is yours under the plan’s terms. Whether you can turn it into money, and by when, is a separate question for each type.

Equity type	What it is	What separation usually does	Ask before you sign
Restricted stock units (RSUs)	A promise of shares at vesting, no purchase needed	Unvested units are forfeited on the separation date. Vested units settle under the plan, usually automatically	Will vesting continue through the severance period, or accelerate to the next vesting date? Get the forfeited count in writing
Incentive stock options (ISOs)	Options with favourable tax treatment if holding rules are met	Vesting stops. The exercise window is set by the plan, commonly 90 days after termination, and exercising after that window generally costs the option its ISO treatment even if the plan allows more time	What is my exact last exercise date, and what happens to the tax treatment if I exercise after it?
Non-qualified stock options (NSOs)	Options taxed as wages on the spread at exercise	Vesting stops. Same plan exercise window. The spread between exercise price and market value is wages, with withholding, when you exercise	What is the per-share value the company will use, and how is withholding handled if the shares cannot be sold?
Restricted stock and ESPP shares	Shares you already own, or bought through a purchase plan	Shares you own stay yours, subject to any company repurchase rights in the plan. ESPP participation ends; accumulated contributions are refunded or applied to a final purchase, per the plan	Does the company hold a repurchase right over my shares, at what price, and when does it lapse?

Three traps sit underneath the table.

The exercise window is a cash deadline, not a formality. Exercising options usually means paying the exercise price in cash, plus tax, for shares that may have no market. In a private company there may be no buyer at any price, and the plan may restrict transfer or give the company a right to repurchase. People regularly face a five-figure payment, inside 90 days, for stock they cannot sell. Price that decision with the actual numbers before the window opens, not in its final week.

Tax follows the type, and the type follows the paperwork. An ISO exercise can create an alternative minimum tax bill even though you received no cash. An NSO exercise is wage income. Extending an exercise window sounds like a pure benefit and can change the tax analysis, including under section 409A for some arrangements. This is squarely a get-advice area, and it is the one part of a separation where an hour of tax advice routinely pays for itself many times over.

Read the forfeiture triggers, not just the vesting schedule. Award agreements and the separation agreement may condition equity on compliance with restrictive covenants, or allow recovery of awards or proceeds for breach or misconduct. Ask for the trigger, the notice you would receive, the amount exposed and the process, in writing. A forfeiture that is triggered by taking a new job can be challenged under Business and Professions Code 16600, but outcomes there are fact and plan specific, so treat the clause as negotiable rather than as either safe or automatically void.

What to request, concretely: a written statement of every award you hold, by type and grant, showing shares granted, vested and unvested counts, exercise price, and the exact deadline that applies to you; continued vesting through the severance period or to the next vesting date; a longer exercise window where the plan permits one; and cashless or net exercise if the plan offers it. Employers refuse some of these and grant others routinely. None of them can be granted after the deadline has passed, which is why equity belongs in the first conversation, not the last.

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The order to do it in

When	Do this
Day 1	File for unemployment
Day 1 to 2	Confirm final pay arrived and is complete, including vacation payout
Week 1	Price COBRA against Covered California
Week 1	Send your records request
Week 2	Elect health coverage
Week 2 to 4	Decide on 401(k), address any outstanding loan
Before the window closes	Decide on equity exercise
Before year end	Review withholding and estimated tax