DO YOU NEED AN ATTORNEY FOR SEVERANCE PAY COMPENSATION?
Severance pay is one of those terms often heard, but one you may not fully understand unless you’ve had experience with it in the past.
The tricky part about severance pay is understanding when it is due and when it is not. There are only a couple of situations in which employers must provide severance pay in California. But there are no concrete rules about what constitutes a severance package.
WHAT IS SEVERANCE PAY?
Severance pay is typically an amount of financial pay given to an employee as compensation for being fired, laid off, or released. A severance package can consist of any number of benefits, including:
- Payment for unused vacation time
- Payment instead of a required notice period
- Medical or life insurance
- Retirement benefits
- Stock options
- Assistance in job search
- Additional months of payment
SEVERANCE PAY IN CALIFORNIA
You may be entitled to severance pay in California after losing your job, but this is not very likely. Because severance pay is not required in California, you usually have no course for legal action if not given a severance package after being laid off, fired, or released.
There are a couple of situations, though, in which your employer is required to offer a severance package. These include:
- If there is a specific contractual obligation, employment policy, or practice which states you are owed severance in the event of being fired, laid off, or released.
- Your employer drove you to believe you would get paid severance, as evidenced by a written contract, documented promise in an employee handbook, a history of the company paying severance, or an oral promise.
WHAT YOU SHOULD KNOW ABOUT YOUR SEVERANCE PACKAGE
- When you feel that your workplace is starting to change pace, and there is an increased risk of losing your job, staying can offer you more benefits. Your company may propose a severance package to financially compensate you after you get let go.
- As an employee, you should know your company’s severance policy in preparation for what is to come. Similarly, reaching out to former colleagues in a similar position can offer insight as well. When you sit down with your boss during the termination meeting, you may receive a severance agreement.
- Though it will be tempting to sign right away, take time to review what the legal document asks of you. Typically, you have 21 days to accept the terms and sign; once signed, there is a seven-day grace period to change your mind.
- Severance pay is calculated by totaling one to two weeks for every year worked – with a maximum of four weeks for each year worked. Keep in mind that not all employers are legally required to provide severance pay, but it can be negotiated based on your situation.
However, if you were wrongfully fired, signing is not in your best interest. It may cost you significant compensation if you consider taking legal action against your employer by relinquishing your ability to file a claim or a lawsuit.
Rather than make this critical mistake, never agree to accept a severance package until you have received legal help with severance pay negotiations. For more information on what you should know, this article will break it down for you.
EMPLOYERS MUST BE MINDFUL OF THEIR ACTIONS
Whether you are the CEO, President, or Manager letting an employee go is never an easy decision. When you sit down during the termination meeting, you should be able to answer questions regarding severance pay.
Moreover, you should have a detailed policy for employees to refer to if it’s an option. As an employer, no law or widely accepted rule dictates you must pay severance – a combination of money and benefits – when you let someone go.
In California, documented and verbal agreements legally bind you to make some effort. The following can be used as proof that you claimed you would provide compensation:
- A written contract guaranteeing severance
- A promise of such pay in an employee handbook or published personnel policy book
- History and precedent of paying severance to employees in the same job
- An oral promise that the employee would receive severance pay
HIRE THE TRIAL LAWYERS OTHER ATTORNEYS CONSULT
If you believe you have an unfair severance package, you may have grounds for legal action. You should hire an employment lawyer in Los Angeles to review your severance agreement to protect your best interests.
Since 1998, The Law Offices of Mann & Elias have helped individuals just like you receive the benefits they deserve. We represent clients at every state and federal court system level in Los Angeles, Riverside, San Bernardino, Orange, San Diego, and Ventura counties.
We know how to handle these cases best and get you the compensation you deserve. Call 323-866-9564 or email info@mannelias.com to schedule your first consultation.
WHY CHOOSE MANN & ELIAS?
Since Scott Mann and Imad Elias have founded the employment law firm, they have successfully recovered hundreds of claims resulting in over $18 million in settlements and verdicts. While there are thousands of lawyers to choose from, our success is rooted in:
- 50+ years of trial experience
- Excellent advocacy skills
- Intense preparation and research
- Quality care
Contact us today for more information about severance agreements. We charge no fee for the initial consultation, and all cases get handled on a contingency basis.
RELATED ARTICLES ABOUT SEVERANCE PAY
You have questions – we’ve got answers! Need more legal help? Check out a few of our legal articles below.
How To Use A Severance Agreement To Avoid A Lawsuit
Not everyone has to accept a severance package deal. You may find that it avoids a lawsuit and fully provides the compensation you are looking for. Before you leave, you should be able to receive substitutions for healthcare benefits and a moderately sized monetary amount. Read on to learn how you can use a severance package to avoid taking this termination to court.
Why You Should Hire a Lawyer to Review Your Severance Agreement
While severance pay is by no means required in California, there are situations in which your employer can be held legally responsible for supplying terminated employees with a severance package.
Consulting with legal professionals can help you tremendously in the long run before signing any legally binding contracts that can cost you. Besides the fact that severance agreements have a lot of value, there are many other vital factors that you should be aware of.
Here are some examples of what our clients have us review in a severance agreement:
- The severance payment
- The employer may owe money to the employee
- Employee benefits
- Release of claims
- Non-disparagement and references
- Integration clauses
- Proprietary information
- Restrictive factors
- Confidential information
- Cooperation clauses
At Mann & Elias, our severance agreement attorney in LA will be able to negotiate, rewrite, or remove certain factors that wouldn’t work in your favor. That is to protect your best interests so you do not fall short of certain benefits later. You can also learn more about why you should hire a lawyer to review your severance agreement.
Should You Offer Severance Pay?
Taking the time to discuss the impact on your employee is a great practice for employers. Not only are you showing that their dedication toward the company is not going unnoticed, but also, you care about their efforts. Many companies offer severance pay to long-term employees that had to be let go for reasons other than misconduct, as well as position restructuring. If possible, refer them to Human Resources to help with finding a new job, extended health care benefits, or additional money.
FAQs ABOUT SEVERANCE AGREEMENTS
Are companies required to offer severance pay?
Severance pay is not a legal requirement. However, when the company contractually agrees to pay severance, they must honor the terms of your agreement. If not, the Los Angeles workplace lawyer you retain can sue them for breach of contract.
Can employers force employees to sign an agreement in exchange for a severance package?
If your employer is intimidating you to sign an agreement or fear retaliation if you don’t comply, seek legal counsel immediately. An employer cannot force you to sign a release of claims in exchange for severance pay if you are entitled to it.
How much pay should be expected?
The compensation employees receive vary per industry and role. The agreement you receive might be drastically different from what your co-worker receives in the same situation.
Employers usually offer one to two weeks of salary as payment. Or they use a formula based on your current salary and the number of years you committed to the company. Executives and managers will receive a more extensive package than non-managerial staff. In addition to money, you might see awards detailing:
- Health coverage
- Outplacement services
- 401k and stock
Is severance pay taxable?
Yes – severance pay is taxable as the amount you receive is considered income! This gap pay will take payroll tax into account, meaning you will have to pay for Social Security and Medicare. The amount you get taxed is based on how much compensation you receive.
What happens when the company gets rid of a severance plan?
Employers can cancel or change severance policies when you least expect it. You might be able to establish “a right” to pay if your employer promised it in a written or oral contract, via the employee handbook, or has provided former workers with final payment in the past.
Your attorney might be able to file a plausible claim after determining whether you are entitled to severance based on your manager’s previous actions.