EMPLOYERS CUT SOME

17,000 jobs in January, spurring the first

turn in job growth since 2003. And, as businesses continue to strain under a slow-moving economy, that trend will likely continue.

The one relative bright spot in this slowing job market is that many companies are opting to offer employees buyouts rather than laying them off. In the past year, Electronic Data Systems, Yahoo and Southwest Airlines have all offered early-retirement or buyout packages to thousands of their employees. The U.S. auto industry, chronically troubled by sluggish sales and red ink, is an old pro at using buyout offers as a way to cut costs. Just last month Ford announced a plan to offer voluntary buyouts to its 54,000 hourly employees, with package options including tuition reimbursement and cash payments ranging from $35,000 to $140,000.

For these corporations, buyout offers are a way to trim payrolls without firing workers outright or confronting unions. For employees, though, an offer can be fraught with dueling considerations and concerns. Accepting the offer can present new opportunities, be it another job or an earlier-than-expected retirement. But it also has the potential to be disastrous, particularly if you're not financially prepared to live without a steady paycheck.

That's why workers should weigh these offers in terms of what they will be losing with the job vs. gaining with the buyout, says Kevin Yeanoplos, CPA and treasurer of Brueggeman and Johnson Yeanoplos, a financial consulting firm in Tucson, Ariz. Another thing to consider especially for older workers is how close you are to your retirement goals. For those planning to retire soon, a buyout package can be the extra financial boost they need to finally leave work behind. But if retirement is five or 10 years down the road, finding a new job will be the next step and that means determining how much money is needed to tide you over until you're re-employed.

No matter what the situation, employees can take some solace in the fact that buyout offers aren't always set in stone. Before blindly accepting the first offer that comes your way, consider these factors first.

You can negotiate

Don't assume your employer's proposal is the final offer. While many companies have little to no wiggle room when it comes to details in the packages particularly in mass buyouts like Southwest's or GM's it's almost always in the employee's best interest to try and get a better deal.

"No package is a take-it-or-leave-it situation," says Kirk Nemer, CEO of the Denver-based Career Protection, which works on behalf of employees facing buyouts or termination to arrange the best exit package possible. "That's how companies present it. But they can be negotiated; they can be re-worked to fit the employees' personal situation. It's so important they don't leave dollars and other perks on the table."

Nemer says his firm recently negotiated better terms on a buyout package for an employee who was close to retirement but didn't want to stop working just yet. The original offer, he says, included six months of income once the worker left the company. Nemer claims the company agreed to another 18 months of income and says the employee was essentially kept on as an "inactive employee" for that time, with the same health benefits and 401(k) contributions he was getting before the buyout.

Assess your health-care needs

If there isn't a clear dollar advantage to the buyout, then employees need to determine how much health coverage will cost them once they're no longer covered by the company, says Dallas Salisbury, president of the Employee Benefits Research Institute. Your employer may keep you on the company plan until your severance ends or subsidize COBRA costs. But remember that once you leave the company, you're required to pay the entire monthly premium, based on what you were paying with their original plan, plus a 2% administrative fee. So if you're too young to qualify for Medicare, you want to be financially prepared to bridge that gap should any medical needs arise.

If, say, an employee has a pre-existing medical condition that would make it difficult or prohibitively expensive to obtain insurance on the public market, he can try to negotiate a smaller severance package in exchange for extended medical coverage, says Yeanoplos. Alternatively, an employee who's covered under her spouse's health plan, may not need the continuation of medical coverage included in the buyout offer. If that's the case, she can ask for extra cash in lieu of the insurance, he says.

Noncompete clauses carry future implications

Employees may be asked to sign a noncompete agreement, which bars them from working for a competitor or soliciting clients from the company. So signing one may hurt later if you plan to stay in the same industry or take customers with you. Ask your employer to make it less restrictive or to remove it altogether. If they won't budge, "you can probably negotiate for more severance if you sign a noncompete clause," says William Morin, chairman of WJM Associates, a New York management consulting company.

Waiting for a better buyout offer can be risky

If you pass on the first round of buyout offers, there's a risk that subsequent offers will not be as generous or even voluntary, for that matter. "You want to understand where the company is compared with its competitors," says John Challenger, CEO of outplacement firm Challenger, Gray & Christmas. That can help you assess the company's general financial health and the likelihood of further buyouts or possibly layoffs down the line.

Even for relatively young workers, finding another job won't be easy in a tight labor market. Your hirability whether you need re-training or if your skills are transferable to another industry should be factored into your decision to take the offer.

There are tax implications

Don't let all those zeroes in the buyout offer sway you. Whatever amount of cash is on the table, think about what it means for your tax bill. Accepting a lump-sum payment runs the risk of pushing you into a higher tax bracket. A worker with $40,000 of taxable income who takes a lump sum of $70,000 gets pushed into the 25% bracket (which kicks in at $65,100 for married people). If, instead, they take $10,000 per year for seven years, they're still in the 15% bracket, says Yeanoplos.

Instead of taking a one-time payment, employees could ask the company to spread out the severance over several years, he says. This would allow the employee to pay income taxes at a lower rate as opposed to paying taxes on the entire sum upfront, he says. But there's a downside to that scenario: the risk that the company, if struggling, goes out of business or runs out of funds to pay the remaining severance.