Severance

1) WHO IS ELIGIBLE FOR SEVERANCE PAY?

Any employee can be eligible for severance pay. Certain factors make it more likely that severance may be paid, such as:

• Length of employment
• Employee’s performance record
• Company Policies
• If there has been any public policy violation
• If you have an ERISA plan -The Employee Retirement Income Security Act of 1974. (Some employees at a director or executive level may have this benefit.)

2) ARE EMPLOYERS REQUIRED TO GIVE SEVERANCE PACKAGES TO THEIR EMPLOYEES?

In most cases companies are not obligated to offer severance pay; however, some companies do have severance policies such as giving 2 weeks of severance pay for each year the employee was at the company.

3) WILL THE length of the employment DETERMINE THE AMOUNT OF SEVERANCE PAY?

There are many factors that determine the amount of severance pay, but the longer an employee is employed the more likely they are going to receive a severance package.

4) HOW IS A SEVERANCE PACKAGE AMOUNT DETERMINED?

Severance pay is determined by several factors, which may include:

• Length of employment with the company
• Performance at the company
• Employee’s salary
• Company Policies
• Whether a bonus or commission is about to become due
• Whether there have been any Public Policy Violations (for example: discrimination, wrongful termination or retaliation from a whistleblower made by the company or any potential lawsuit that the employee may be able to bring against the company.)

5) TIMEFRAME TO ACCEPT OR NEGOTIATE A SEVERANCE PACKAGE

The amount of days an employee has to sign can vary. A typical number is 21 days. Under the ADA, if the employee is 40 or older they would have a minimum of 21 days to sign. The employer may allow you more time; the time limits are almost always identified in the severance agreement. To be sure of the time limits and your rights, it is always best to contact an attorney as soon as a severance package is received.

6) WHEN to CONTACT AN ATTORNEY

Immediately. An employee should contact an attorney as soon as s/he receives a severance package or as soon as s/he knows the company is or might be letting them go.

7) SEVERANCE PAY after resigning from jOB?

In some cases an employee can receive compensation if they are resigning from a job. It depends partly on the reason the employee is quitting. An employee should contact an attorney before resigning to determine what their rights are. Usually, once an employee has resigned from their position they may no longer be entitled to severance pay or other benefits such as EDD.

8) SEVERANCE PAY FOR TERMINATED WORKERS?

It often depends on the reason for termination. Severance pay is less likely when there is a termination for cause.

9) ELIGIBILITY TO COLLECT UNEMPLOYMENT WHEN EMPLOYEE RECEIVES A SEVERANCE PACKAGE

The employee may be able to collect unemployment. The employee should consult an attorney in regards to unemployment to determine if they are eligible for those benefits. If an employee “resigns” they are usually not eligible for unemployment.

10) CAN THE ATTORNEY NEGOTIATE OTHER TERMS OF THE SEPARATION AGREEMENT BESIDES THE PAYMENT AMOUNT?

Yes, the attorney is able to help negotiate the terms and language of the agreement as well as the severance pay amount.

11) TYPICAL TERMS IN A SEVERANCE AGREEMENT

The terms can vary given the variety of situations for each employee, however, common terms in agreements are:

• Confidentiality Clause – The employee agrees to keep the settlement confidential.
• A Non-Disparagement Clause – The employee agrees not to speak poorly of the company.
• Release of all Claims – The employee agrees to release all claims against the company forfeiting the opportunity to file a lawsuit in regard their employment.
• Return of Property – The employee agrees to return all company property, such as: laptops, files, cell phones, keys, etc.

12) HOW IS THE ATTORNEY PAID AFTER THE severance AGREEMENT HAS BEEN FINALIZED?

The attorney usually receives a check from the company for his or her portion of the settlement. A typical fee for an attorney is anywhere between 33 % to 40% of the increase by which the attorney is able to increase the severance package. At Skinner Law Group APC, we only charge a fee if we are able to increase the amount of the original severance offer, and our fee only applies to the increased amount and not the original severance offer.