Employers are not legally required to offer severance pay. Instead, severance package rules are based on your employment contract, and the company’s policies and practices.
Understanding the intricacies of the legal framework surrounding severance packages can help you protect your rights. Consulting an employment attorney can help you understand the importance of severance agreements, the potential reasons behind your employer’s refusal, and steps you can take to assert your rights and seek the compensation you deserve.
What is Severance Pay?
Severance pay is a financial arrangement between an employer and an employee when the employee is terminated. Severance pay is designed to bridge the gap between the job the employee is leaving and the time it takes the employee to find a new job.
A severance package may include:
- A lump sum or a series of payments made to the terminated employee.
- A release of claims typically states that the employee agrees not to sue the company for any employment-related claims, such as wrongful termination or discrimination.
- Benefits include continued health insurance coverage (COBRA), assistance with job placement or career counselling, or the continuation of certain company perks.
- A non-disparagement clause that prohibits both the employee and the employer from making harmful statements about each other.
- A confidentiality provision that restricts the employee from disclosing confidential company information or the terms of the severance agreement.
- In some cases, employers may include non-compete or non-solicitation clauses, prohibiting the employee from working for competitors or soliciting the company’s clients or employees for a specified period.
- Provisions regarding the acceleration and/or cancellation of equity grants such a stock options, restricted stock units, or other like grants.
Can An Employee Sue for Not Receiving Severance Pay?
No provision under the Fair Labor Standards Act (FLSA) requires an employer to pay an employee severance pay unless explicitly outlined in an employment contract, severance agreement, or company policy.
A severance package is generally considered a voluntary benefit that employers may offer employees in situations like lay-offs, terminations without cause, or as part of an overall benefits package.
It’s crucial that employers and employees carefully review employment contracts, severance agreements, and company policies to understand their rights and obligations regarding severance packages.
An employee may have legal recourse if a severance package is documented in a written employment contract, severance agreement, or company policy, and the employer fails to follow through on its commitments.
Factors to Consider When Taking Legal Action
Before taking legal action, employees should meet with an experienced employment attorney to help assess their case.
An employment attorney can explore your options, such as negotiating for a better package or filing a legal claim. The attorney will talk with your employer on your behalf and help advocate for your rights. Not only will the attorney present your case persuasively, but the attorney can also help negotiate a better severance package.
An employment lawyer can help you file a lawsuit if you have a legal case and cannot reach a settlement with the employer.
Contractual Obligations
Suppose you have a valid and enforceable employment contract explicitly outlining the terms and conditions of a severance package. In that case, an employment attorney can help if the company refuses to comply with the contract.
Company Policies
Established written severance policies or practices consistently applied to employees in certain situations may be legal grounds to sue your employer for severance compensation.
Employment Discrimination
Suppose your employer has denied you a severance package based on discriminatory factors like age, race, or gender. In that case, you may have a basis for filing a discrimination complaint with the Equal Employment Opportunity Commission.
State Laws
Some states have laws that govern severance package proceedings under specific circumstances, and an experienced employment attorney can help guide you through the legalities.
Rowdy Meeks Legal Group LLC: Nationally Recognized Employment Attorneys
At Rowdy Meeks Legal Group LLC, we pursue employee rights. This includes unpaid overtime cases to reviewing severance packages; we vigorously enforce your wage rights. We also offer guidance and support for employees negotiating severance packages at the beginning and end of their employment.
If you need help negotiating the complexities of severance pay, you should contact us today.