Does My Former Employer Owe Me Compensation?

Employees who have been terminated from their jobs are often entitled to some form of compensation upon separation. Whether compensation is due depends on the reason for leaving, the terms of the employment contract, if any, and the state where the employer is located. Compensation may be in the form of back pay, severance pay, benefits, unemployment insurance, and unused vacation pay.

At-will employment

In most states, at-will employment is the default relationship unless otherwise specified by contract or collective bargaining agreement. At-will employment permits either party to terminate the relationship at any time, for any or no reason. So when an at-will employee is terminated, there is no obligation on the part of the employer to provide notice or severance pay with a few exceptions.


If your contract stipulates advance notice before termination, then your employer must give notice. Also, a federal law known as the Worker Adjustment and Retraining Notification (WARN) Act entitles workers who lose their jobs due to plant closings or mass layoffs to receive 60 days’ notice. This would include employers of a minimum of 100 workers who layoff at least 500 workers or 1/3 its workforce, or closes a worksite by which at least 50 workers would lose their jobs.

In the event that a WARN-covered employer fails to give adequate notice to employees prior to termination, affected employees are entitled to wages and benefits for each day of the violation, up to 60 days.

Severance pay

If you are under contract that promises severance pay on termination, your employer must pay an amount of severance pay per the agreement. Absent a written agreement, you may still be entitled to severance in some states where severance is mandated by statute. Employers may also be obligated to continue paying health benefits for a set period of time after separation.

Unemployment compensation

Employees who have lost their job through no fault of their own may be entitled to unemployment benefits. Unemployment compensation is paid by the state government; the employee works and is funded by federal and state payroll taxes paid by the employer. Whether you are entitled to receive unemployment insurance, and the amount and duration of that entitlement, all depend on the state you work in and how long you were employed at your former job.

Workers’ compensation

An employee who is laid off while receiving workers’ compensation could still be entitled to continue receiving benefits after the layoff. If you are out on workers’ compensation during a layoff or plant closing, your employer would still be obligated to continue your benefits, paid by the employer’s insurance.

Other compensation

If you’ve been laid off or fired from your job, make sure that you’ve accounted for any and all compensation you are entitled to on exit. Be sure to settle up with your former boss for any commissions you may have earned in a sales position, bonus money you earned while employed, reimbursement for company expenses, etc.

Lastly, be sure to request a specific reason from your employer for your dismissal. If no reasonable explanation is offered and you think you have been terminated illegally, you should contact your local Equal Employment Opportunity Commission (EEOC) office and an employment attorney in your state. Your rights as a worker prohibit an employer from wrongfully discharging you. It is unlawful for an employer to terminate any employee, or refuse to hire, on the basis of race, religion, color, age, gender, national origin or disability.

For information on how to file a charge of discrimination, visit the EEOC website here. In a case of wrongful discharge, your compensation may include reinstatement, back pay, punitive compensation, legal fees and more.