Severance Pay Mandatory
When a company makes the decision to lay off employees or otherwise terminate an employment relationship, the business may choose to offer severance pay as part of a package. This is generally a combination of money and continuing benefits like insurance coverage or unused vacation and PTO days. It is important to note that severance pay, like all wages, are subject to state and federal taxes. Depending on where you live, this could greatly impact your final paycheck.
The severance package can also include non-compete or confidentiality agreements. These clauses can limit your ability to work in a similar industry for a specified period of time, sometimes up to a year or more. It is important to review these agreements before you agree to them. A New York City employment lawyer can help you determine if these clauses are fair or if they violate your rights to due process.
If a company offers you a severance package, it is often required to provide notice in accordance with the Worker Adjustment and Retraining Notification Act (WARN). In addition, companies are usually obligated to pay your full salary for the final 60 days of employment. However, even if the company is not legally obligated to offer you a severance package, they might do so as a gesture of goodwill or because they were previously bound by oral promises or a severance package agreement.
Is Severance Pay Mandatory by Law?
Companies vary in the amount of severance packages they offer, but on average, a severance package is two weeks of pay for each year you worked for the company. It is not unusual for companies to offer more severance package pay for top executives or senior managers.
Often, the severance package includes other perks like continued health and life insurance coverage or other company resources such as computers or cell phones. Additionally, it can include career consultation services such as job search support or resume writing assistance. Some companies will also give you the option to keep unused vacation or PTO days or a bonus that wasn’t part of your base salary. severance pay lawyer can be paid as a lump sum or in installments. Typically, a lump sum is preferable because it allows you to take control of your financial future immediately.
When negotiating a severance pay, you should also consider whether you want to sign a release or waiver of claims that would prevent you from filing a lawsuit for illegal termination or discrimination. For example, if you are over 40 and the company is asking you to waive your rights under the Age Discrimination in Employment Act (ADEA), you have 21 days to consider the waiver and consult an attorney before signing it.
