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. In the state of California, there are only a couple of situations in which employers are required to provide severance pay, and 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 in lieu of a required notice period, medical or life insurance, retirement benefits, stock options, assistance in job search, and additional months of payment.
Severance Pay in California
In California, you may be entitled to severance pay after losing your job, but this is not very likely. Because severance pay in California is not required by state law, 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 could be 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 led you to believe you would be 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 to pay severance.
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 that you may be losing your job, staying can actually offer you more benefits. Your company may offer you 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 is asking of you. Normally, 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. Should you sign on the dotted line and accept the offer, you have lost your ability to file a claim or a lawsuit. Rather than make this critical mistake, never agree to acceptance of 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.
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. Employees should consider hiring legal consultation with a specialized lawyer that is well-versed in work-related claims. They can walk you through the termination process and ensure that you are legally protected from being taken advantage of. You should be able to receive substitutions for healthcare benefits and a moderately sized monetary amount.
As an employer, you may be anxious to have the employee agree to the terms of the severance agreement and sign, but never let your emotions get the best of you in these situations. Even if you are not on the best of terms with the individual, never allow yourself to use threats or any other type of coercion to make them sign the agreement. If you do, you increase the risk of having a lawsuit filed against you claiming they signed the agreement under duress.
Read on to learn how you can use a severance package to avoid taking this termination to court.
Should You Offer Severance Pay?
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 on it for employees to refer to if it's an option. As an employer, there is no law or widely accepted rule that dictates you must pay severance – a combination of money and benefits – when you let someone go.
In California employers do not have to provide severance pay to an employee when employment ends. However, if you have documented or verbally insinuated you would, it legally binds 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
- A history and precedent of paying severance to employees in the same job
- An oral promise that the employee would receive severance pay
Taking the time to discuss the impact this will have for 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.
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. If you believe either of the above situations is true in your case, you may have grounds for legal action. It is best that you hire an employment lawyer in Los Angeles to review your severance agreement to protect your best interests.
Although consulting with legal professionals is not necessary, it 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 important factors that you should be aware of. At Mann & Elias, we will be able to negotiate, rewrite, or remove certain factors that wouldn’t work in your favor. This is to protect your best interests in the long run, so you do not fall short of certain benefits later.
Here are some examples of the important factors that clients have their attorneys 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
As you can see, there are several factors mentioned above, and those are just the most common; however, there is potential for many other factors to be reviewed. If you are in need of a severance agreement lawyer in Los Angeles who has successfully represented an abundance of clients to protect their best interests, it is important to contact us. You can also learn more about why you should hire a lawyer to review your severance agreement.
The Law Offices of Mann & Elias
Since 1998, we have offered exceptional, high quality legal representation to members of Los Angeles, Riverside, Ventura, San Diego, San Bernardino, and Orange counties. We have helped thousands of individuals receive the employment benefits they deserve. If you believe you are owed severance pay from an employer, contact us today.