Severance Protection
Unfortunately, layoffs can strike at any time, even in a good economy. When your employer decides to terminate you, they might offer a severance package. For many workers, severance can be an important lifeline while they are between jobs, but sometimes employers play fast and loose with what they promise. If your severance turns out to be less than you were expecting, you might have important legal rights.
Typical Severance Benefits
Employers are not legally required to offer severance, and many of them do not. However, you should check your employee manual, handbook, or job contract for more information about whether your employer has a policy of offering severance. Often, they will offer salary and/or benefits based on the number of years you have worked for the company.
Salary could be paid in a lump sum or you might continue to receive payments for a limited amount of time, such as three or six months.
If your employer believes you might have a discrimination claim against the company, they might offer you more money. In fact, any suspected discrimination (such as sex, race, or disability discrimination) can be an important bargaining chip and often gives you an opportunity to negotiate a bigger payout. In exchange for severance, you voluntarily waive your ability to bring a discrimination lawsuit. In this way, a severance agreement can offer protections to both employers and employees.
Taking Time to Review the Severance Package
Your employer might give you a limited amount of time to review a proposed severance package. However, if you are age 40 or older, then the law requires that you have at least 21 days.
You can also request more time, especially if you think you have a valid wrongful termination claim against your employer. In that situation, you might want to reject the initial severance offer and make a counteroffer for more money or increased benefits.
Getting Stiffed on Severance
Severance comes in different shapes and sizes. For example, an employer might voluntarily state they are paying you severance. In this situation, you probably do not have a legally enforceable agreement unless it is contained in an employment contract, handbook, or manual.
Other severance agreements are contracts. Each side reviews and agree to the terms of severance, and once the agreement is signed it becomes a binding on both parties. Bargained-for severance agreements usually contain a waiver of future liability, which is the employee’s consideration in exchange for pay or benefits.
Unfortunately, employers sometimes shortchange employees on severance. For example, they might not pay as much as they promised or cut off benefits early. If you have a bargained-for severance agreement, then you might be able to sue in court to receive what you were promised. If you did not have a severance agreement, then your options might be more limited.
Speak to an Employment Attorney in New York about Severance
Ending a work relationship sometimes does not go smoothly. If you believe an ex-employer has stiffed you on promised severance benefits, you might have a legal cause of action. Contact the Sattiraju & Tharney, LLP today to discuss your options with a dedicated New Jersey employment lawyer.
FAQs About Severance Protection
Are employers legally required to offer severance pay when laying off workers?
No, employers are not federally or state-mandated to provide severance packages. However, you should check your company’s employee handbook or employment contract to see if they have an established policy of offering severance based on your years of service; if a formal policy exists or you sign a negotiated agreement, those terms become legally binding.
How much time do older workers legally have to review a severance package?
If you are age 40 or older, federal law gives you specific protections under the Older Workers Benefit Protection Act (OWBPA). Your employer must give you at least 21 days to review and consider the proposed severance package before signing it, allowing you ample time to consult with an attorney or negotiate the terms.
Can you use a suspected discrimination claim to negotiate a higher severance payout?
Yes. If you believe you were terminated due to your race, sex, age, or disability, that suspected discrimination can serve as an important bargaining chip. Because signing a severance package usually requires you to waive your right to file a future lawsuit against the company, employers are often willing to offer a larger financial payout to settle the issue and protect themselves from litigation.