This is most certainly a very important topic and relevant for everyone. I will address the various issues raised in the relevant parts of the blog to make it possible for everyone to find the information applicable to their case.

Effect of Lay-off on H-1 and L-1
An H-1 or L-1 holder who gets laid off can be thought to be immediately out of status. There is NO grace period, not even one day. If, however, you continue to receive your salary, it can be argued that you are still in status. How valid or good that argument is remains to be tested.
Being “Out of Status” and Being “Unlawfully Present”
Bear in mind the very important distinction between being out of status and being unlawfully present. Unlawful presence of 180 days bars you from entering USA for 3 years and unlawful presence of one year raises that bar to 10 years. These bars are very difficult (if not impossible) to waive.
Most commonly, unlawful presence is triggered by expiration of I-94, revocation of H-1 by your employer or whenever CIS says your unlawful presence is now beginning.
Being merely out of status does not impose such drastic penalties automatically, but there are dangers here too. If discovered, you can be deported (removed). In that case, you cannot come back for (I believe) five years. Usually, being out of status for a few days or even months by itself may not be a major problem. But you MUST try not to fall out of status. I will provide one method below.

Option 1. Applying for Derivative Status
You can apply for derivative status if your spouse is in USA with his or her own status.

Option 2. Applying for B-1/B-2 Status
In most cases where interim status is needed (Some exceptions, e.g., J-1 with HRR) a B-1 application could be an option.
- Get Form I-539 from CIS (NOTE: CONFIRM THE FILING FEES)
- Apply for a 6 months change of status to B-1/B-2 (business/visitors visa) which in my view is a catch-all visa/status for all stay in the U.S.
- Attach to the I-539 a letter explaining to the CIS that
1. You have been laid off unexpectedly and that you need to stay in USA to wind up your affairs and to look for a job, if possible;
2. You have the means to support yourself; and
3. You know you are not allowed to work on a B-1/B-2.

This should usually get you 6 months stay without falling out of status.

Note that in one of our cases back in June 1999, CIS seems to say that they may NOT issue B-1/B-2 to everyone. Note the following letter from INS:
"The B-1/B-2 classification is not a "catch all" classification available to all who wish to come to the United States temporarily for whatever purpose. Instead it encompasses a specific, defined class of alien. You must establish the following to be eligible for a B-1 nonimmigrant visa: As you are in the United States conducting business on behalf of a foreign entity, it is reasonable to expect that you are making frequent contact with this entity. Submit evidence of your contact with the foreign company by submitting your phone statements.......Submit a letter from your employer that describe the nature of your employment with them...."
I think CIS is wrong. B-1 specifically appears to me to be a catch-all visa. For example, when someone needs medical treatment, they apply for a B-1 visa. To be safe, we recommend you apply for B-1/B-2, casting even a wider net.

Here are some Follow-up Questions from H-1 and L-1 Holders

Q1. What if your company has promised that they will not revoke your H-1/L-1; does that make a difference?
A1. It makes some difference. You are still out of status the day on which you stop working. But the 180-day period that results in the dreaded 3-10 bar would not apply to you until your I-94 expires or CIS catches on and formally declares that you are out of status.

Q2. What if the company keeps you on their payroll but without pay?
A2. CIS is unlikely to allow that as being "in status."" Also, if we were representing the company, we would never advise them to take this route. This is dangerous for the company.

Q3. What is the company has given you a severance package that includes your getting paid for 2 (or more, or less) months after they laid you off?
A3. Technically CIS would consider you out of status from the day you stop working. It does not matter if you are still getting paid. That is what they have said in one of their memos (which we find a rather strange interpretation of the law). But as a practical matter, CIS requires only pay stubs to prove that you were in status. So you may be able to take benefit of this CIS practice.

Q4. Should you apply for some other status?
A4. Probably yes. Some folks apply for a student status (F-1), some for H-4 or F-2 (if their spouses are on H-1 or F-1) and some for tourist (B-2) or business status (B-1). These options could all work to help you stay in status.

Q5. If you convert to another status, can you then convert back to H-1 if you find a new employer?
A5. Yes.
Q6.1. To protect my status in US, if I transfer from H1 to tourist or business visa, have I to apply for it before my current H1 visa gets expired?
A6.1. Yes.

Q6.2. Am I legal and "in status" if my current H1 is expired and still I am waiting for approval of tourist/business visa?
A6.2. You are authorized to stay in USA while waiting for a decision on a timely filed application.

Q6.3. How much time will it take between I start preparing for tourist/business visa and Your office files the petition for it? (i.e. in preparation of papers)?
A6.3. I do not believe a lawyer is needed, but you can call us to discuss your situation.

Q6.4. Can I hold Tourist and H1, both types of status at the same time?
A6.4. No.

Q6.5. Do I need to have any specific eligibility for the Tourist visa?
A6.5. If you mean any specific degree or education, no.

Effect of Layoff on Green Card Process
I will address here the most common method of obtaining green card – through PERM. If your situation is different, go ahead and post a comment here. I will respond as well as I can

LAY OFF ANY TIME BEFORE I-140 APPROVAL
If you get laid off before I-140 approval, you can carry NOTHING forward to the next employer. You have to start your PERM all over again with the new employer. If, however, the I-140 gets approved even after the layoff, we can at least try to carry the priority date forward as we would in a ordinary 140 approval. See the discussion in the next point.

LAY OFF AFTER I-140 APPROVAL
If a person has received an I-140 approval through an employer, the priority date then permanently belongs to him or her, UNLESS the I-140 is revoked.

If such a person gets laid off, their priority date will remain the old one, even though they have to process their labor certification and I-140 again with the new employer. It does not matter where in USA the new job is located, what the new job title is or whether the new job falls under EB-2 or EB-3. The priority date is still transferable.
We recommend that an applicant must keep at least a copy of the I-140 approval notice.

LAY OFF AFTER I-140 APPROVAL AND I-485 PENDENCY OF 180 DAYS
Chances are, you will be fine. Read the material on our website on AC21 portability.  For instance: http://www.immigration.com/faq/adjustment-status/ac21-portability-chang…

Further Questions 26 Nov 2008
My 485 AOS is pending and 140 is approved. If my current company does layoffs and I happen to lose my job.

A: Can I be without job for some time(small duration)? I mean till I get a new Job?
Ans.As long as your 485 is pending, you are not out of status even if you are not working. You need to find a "similar" job and should file AC21 letter with CIS. If there is a gap in employments, that is not a major issue as per the May 2005 Yates memorandum. The only way we can get into trouble is if CIS sends an RFE asking for an employment letter (they usually give us several weeks to respond) and we are not able to provide such a letter showing a "similar" job.

B: Is my Green Card in trouble Immediately if I am out of Job? Is there any provision that I can use in this case?
Ans If your I-140 was not approved and AOS had not been pending 180 days, there would potential for trouble.

C: Will leaving the country and trying for job from India and then coming back in USA help?
Ans. No need.

02/27/09
Q. Hi Rajiv, In context for preserving the PD, is there a time limit on that. If the 140 is approved and I get laid off, can I leave US, return after (say) 2 years with a different H1/L1 and start the GC process with same PD.
Ans. Under the current law, there is no time limit. So, yes, you could. Bear in mind, this holds true only if the I-140 is not revoked.