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Following the federal government’s lead, many private sector employers have conducted mass layoffs. A big question for many private-sector employees is: Does my employer have to offer severance pay? The short answer is, probably not.
Does my employer have to pay severance?
Generally, a private-sector employer must pay severance only if they signed a contract agreeing to do so. For example, a corporate executive may have an employment agreement that says the employer will pay six months of severance if it decides to terminate the executive’s employment without cause. Therefore, if the employer laid off the executive for financial reasons, the employer would have to pay six months of severance pay. However, most employees don’t have this type of agreement.
Does my employer have a severance policy?
The law doesn’t require employers to have severance policies. However, some employers may have a severance policy or even an unwritten practice of offering severance to employees who are laid off or terminated without cause. An employer severance policy typically states how severance will be calculated. For example, the employer could offer to pay two weeks’ salary for each year the employee worked for the company. Bear I mind, these types of policies are discretionary, and the employer could change or end the policy.
What if my employer pays severance to other employees but not me?
Although severance policies like those described above are voluntary, an employer can’t offer or deny severance pay in a way that violates anti-discrimination or similar laws. For instance, it would be illegal to offer severance only to employees of a certain race or sex.
What do I have to do if I sign a severance agreement?
In exchange for severance pay, you should expect to waive discrimination and any other claims you may have against your employer. This typically means you must agree not to file any complaint or lawsuit against your employer, its officers, employees, and associated entities. Severance agreements also frequently include other restrictions, such as requiring you to keep the agreement confidential and prohibiting you from disparaging the employer. Additionally, some severance agreements may include non-competition, non-solicitation, and other restrictive covenants.
Can I negotiate for more severance pay?
Whether you can negotiate for more severance pay depends on many factors, including your employer’s willingness to negotiate and whether you have any legal claims against your employer. Your employer may offer a boilerplate agreement and refuse to negotiate any of the terms. This is likely if your employer is conducting a reduction-in-force or mass layoff. However, if events during your employment or relating to the separation support a legal claim —such as illegal discrimination or sexual harassment— your employer may be more motivated to negotiate.
Should I have an attorney review my severance agreement?
If you are considering whether to sign a severance agreement, it may be helpful to consult with an experienced employment attorney. Alan Lescht and Associates, P.C., provides advice and representation in connection with severance packages. During a consultation, we will assess the circumstances surrounding your separation to determine if you have any legal claims against your employer. We will review the severance agreement and advise you about the specific terms and your obligations under the agreement. Contact us today to schedule a consultation with an experienced employment attorney.
