Make us your home page
Instagram
Jobs | Downsizing

The difference between job layoffs and buyouts

With hundreds of public and private employers downsizing, some are laying off workers, while others are offering buyouts. Both moves help employers reduce head counts and cut wage and benefit costs. For workers, the difference between a layoff or a voluntary buyout may be dramatic. Here's a look at the issues involving buyouts and layoffs. McClatchy-Tribune Newspapers

What's the difference between a layoff and a buyout?

Suzanne O'Keefe, an associate professor of economics at California State University, Sacramento, says layoffs happen when employers must cut payrolls fast. Workers selected for layoff have no say in the matter but may return later if they have recall rights under a contract.

Buyouts are different. "They are typically packages of financial incentives offered to workers to leave jobs voluntarily. They have a choice," O'Keefe said. "But when they leave, it's permanent."

Why do employers offer buyouts before doing layoffs?

O'Keefe said buyouts are a goodwill gesture that employers adopt when they must reduce staff but maintain morale of remaining workers and stature in the community.

Buyouts are risky, though. The executives must pick who gets downsized – factory workers vs. administrative, for example — and must keep remaining workers motivated.

When companies don't meet financial targets because too few workers took buyouts, layoffs may be the next step.

If you take a buyout or voluntary severance package, are you eligible for unemployment benefits?

Accepting a financial package to leave a job is considered a voluntary quit that makes a person ineligible for unemployment benefits, said Michele Sutton-Riggs of California's Employment Development Department's Unemployment Insurance program.

However, employers use the term "severance" loosely, and some offer supplements. Because eligibility for unemployment compensation is decided case by case, people should apply and let state officials decide, she said.

The difference between job layoffs and buyouts 01/09/09 [Last modified: Sunday, January 11, 2009 5:32pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Tribune News Service.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Kidpreneurs — and adults — capitalize on gooey, squishy Slime craze

    Retail

    First it was Play-Doh. Then Gak. There have been dozens of variations for sale of the oozy, gooey, squishable, stretchable kids' toy through the generations.

    Aletheia Venator and Berlyn Perdomo demonstrate the stretchiness of their slime. - Berlyn Perdomo and her friend, Aletheia Venator, both 13, make and sell slime which can be seen on their instagram site @the.real.slimeshadyy [JIM DAMASKE   |   Times]
  2. The last farmer of Florida's prized Zellwood corn is thinking of packing it in

    Consumer

    MOUNT DORA — Hank Scott steps out of his pickup between the long rows and snaps off an ear that grows about bellybutton-high on the forehead-high stalks.

    Hank Scott, co-owner of Long and Scott Farms, shucks an ear of corn on the farm in Mount Dora, Fla., on Wednesday, May 10, 2017. The farm specializes in Scott's Zellwood Triple-Sweet Gourmet Corn. LOREN ELLIOTT   |   Times
  3. Law firm's Russia ties prove nothing about Trump

    Business

    The statement

    "Law firm @POTUS used to show he has no ties to Russia was named Russia Law Firm of the Year for their extensive ties to Russia. Unreal."

    Sen. Chris Murphy, D-Conn., stands during a media availability on Capitol Hill, Monday, June 20, 2016 in Washington. A divided Senate blocked rival election-year plans to curb guns on Monday, eight days after the horror of Orlando's mass shooting intensified pressure on lawmakers to act but knotted them in gridlock anyway — even over restricting firearms for terrorists. (AP Photo/Alex Brandon)
  4. Pasco county lawyer disbarred for taking woman's money

    Real Estate

    NEW PORT RICHEY — The Florida Supreme Court on Thursday disbarred Pasco County attorney and former congressional candidate Constantine Kalogianis.

    The Florida Supreme Court on Thursday disbarred Pasco County attorney and former congressional candidate Constantine Kalogianis. 
[2016 booking photo via Pasco County Sheriff's Office]
  5. Rick Scott signs package of tax breaks

    State Roundup

    TALLAHASSEE — Gov. Rick Scott signed a tax cut package Thursday that — while vastly scaled back from what he wanted — eliminates the so-called "tampon tax" and offers tax holidays for back-to-school shoppers and Floridians preparing for hurricane season.

    Florida Governor Rick Scott signed a tax cut package that will cost state coffers $91.6 million during the upcoming year. [Joe Raedle | Getty Images]