MW So your company offered you a buyout. Should you take it? Here's what to know.

By Weston Blasi

As Google and NASA offer their workers buyouts, here's what to consider when deciding whether it's a good deal - or better than potentially being laid off.

Is being offered a buyout any better than getting laid off?

That's the question workers like those at Google and NASA may be asking themselves after buyouts and early-retirement efforts were announced by both employers this week. And this comes on the heels of the widespread "deferred resignation" buyouts offered to millions of federal workers earlier this year.

Alphabet $(GOOGL)$ $(GOOG)$ said this week that it's offering buyouts to many of its workers in a bid to cut costs amid economic and antitrust uncertainty, but did not specify how many workers were impacted.

This is a common move for companies, which may offer an employee - particularly a long-term, higher-paid worker - a buyout agreement to entice them to leave their job. To incentivise this, companies pay severance with the buyout package, among other benefits. Workers then have a choice to accept or reject the offer.

"A buyout is a voluntary exit option, has exit benefits and gives you some control over the decision," Priya Rathod, a career expert at Indeed, told MarketWatch. "A layoff is an involuntary termination of employment. It's often due to business reasons like downsizing or restructuring."

On the surface, employee buyouts may be seen as preferential to layoffs because they allow workers to leave on their own terms, if they want to go. (You can also turn down a buyout - more on that below.) But being presented with a buyout offer can be more complicated than that, especially if you suspect your company may follow a round of buyouts by laying off workers anyway in the near future.

Here's what sets them apart, and how to decide whether taking a buyout offer is a good deal for you or not.

What's in a good buyout package?

Workers who have received a buyout offer should carefully review the buyout's terms before deciding whether to accept. And it's not just about the money.

"A good buyout includes generous severance pay, including the extension of benefits (healthcare and other coverage), possible bonuses, and often doesn't hurt your unemployment benefits," Rathod said.

So what should you look for, exactly? A competitive buyout offer may include multiple months of pay at your equivalent salary rate, fully covered COBRA health-insurance benefits during that pay period, and continued retirement-account matching, Rathod said. A weak offer, on the other hand, may include only a few weeks or a month of wages, as well as you having to pay your own COBRA premiums, and a lack of clarity on potential future unemployment benefits.

A rule of thumb for projected severance is to multiply the worker's number of years at the company by one or two weeks. For example, an employee with five years of service at the company should expect five to 10 weeks of severance pay. Again, this is just a general rule, as employers are not required by law to give severance under the Fair Labor Standards Act.

This is why it's important to read through any buyout offer carefully and assess your present financial situation before making a decision. For example, if you have a large family and your total health-insurance costs would skyrocket without your job's insurance coverage, then it would be smart to verify that your coverage would continue in the buyout offer before accepting it. And it's worth noting that employees may be able to negotiate their severance pay while mulling their buyout offer, too.

Where buyouts can bite you

Workers who get laid off are typically eligible for unemployment benefits. But sometimes, accepting a buyout can be considered a voluntary resignation, which may affect your eligibility depending on your state's rules and the specific terms of the agreement. You can look up your state on this map to check the eligibility rules where you live.

And a noncompete agreement, which keeps employees from working for a competitor or starting a rival business, could also be part of a buyout agreement. That limits your opportunities to find a new gig in what's already a difficult job market for many people outside of the health, leisure and hospitality industries.

This is why it is important to look beyond just the monetary offer.

"Many times with buyouts, health insurance will be offered for a longer period of time, which workers really value, [or] possible continued 401(k) matching is going to continue," Rathod said. But if you're not sure what's included or if there's any fine print to be aware of, then make sure to ask plenty of questions to find out.

Buyouts vs. layoffs

Buyouts can be a precursor to layoffs. It's common for companies to offer workers buyouts, and then if a certain number of workers don't take them, layoffs may ensue. But it's also entirely possible that a worker might turn down a buyout offer and still keep their job. So it's somewhat of a gamble.

"When considering a buyout, an employee should consider how likely a layoff is," Rathod said. "It's very individualized. A buyout can be a safer exit if they think their area of work is high risk. They can be a precursor to layoffs, but not always. If the companies are in financial trouble, or leadership changes, that could be a sign of layoffs to come."

See: Why there are so few 'safe' jobs right now

Many U.S. workers are worried about the possibility of being laid off right now. According to a May survey conducted by Indeed and the Harris Poll, roughly half (46%) of Americans are concerned about being laid off in the next year. Another recent Glassdoor survey showed that employee confidence dropped to 44.1% in May, a record low for the tracking poll that started in 2016. The employee confidence metric refers to those who have a positive six-month business outlook for their respective employers.

Rathod added that amid the growing fears that workers may have, there's a misconception that buyouts are only offered to older workers approaching retirement age. While that could be more common, buyout offers can be made to anyone.

When should you get a lawyer?

One question workers may be wondering: Do you need a lawyer to read over your buyout offer?

If the agreement is more complicated, and has complicated language surrounding nondisclosure agreements (aka NDAs or confidentiality agreements) and noncompete clauses, or you're being asked to waive legal liability, then it may make sense to have a professional attorney look it over. Rathod added that legal services might even be provided by your company, too.

"It's an individual decision. You definitely want to read through the offer carefully," she said.

-Weston Blasi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 14, 2025 10:00 ET (14:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.