Severance Agreement FAQs - For Employees | Mann & Elias
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Severance Agreement FAQs – What Employees Should Know

Need Help Negotiating a Severance Agreement? Talk to an Employment Attorney

When you get laid off or lose your job for reasons beyond performance, you might want to consider severance pay. Post-employment compensation is a complex process that may require assistance from severance pay lawyers in Los Angeles. There are a few things you should know before you accept an agreement from your employer. Read on for a better understanding of how it works.

Are Companies Required to Offer Severance Pay?

Severance pay is not a legal requirement. Although your company may be undergoing layoffs or making an adjustment to their staff does not mean you are entitled to final pay beyond your salary. 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. Additionally, if you are a unionized employee with an agreement, or it is guaranteed in an employee handbook ensure it is enforced. In California, there are no laws requiring employers to pay for benefits after termination. But you might be able to file for unemployment.

Are Employees Entitled to a Severance Package If It Is A Written Severance Plan?

Employers are not required to offer severance agreements, which means they can determine what is available to workers. Your employer should clearly outline who is eligible and which benefits are included in the package. Make sure to clarify if it kicks in before or after your employment ends.

If you have an employment contract that specifies that you will be offered severance, an employer can change the terms and conditions of it at any time. Depending on the nature of the business, the company can also do away with the option. Whichever they decide, the employer must provide notice to employees before the changes go into effect.

An attorney for severance payments in LA would recommend you obtain a copy of your employer’s severance plan. Re-read your contract, look through the employee handbook, or reach out to human resources for more information.

Can Employers Force Employees Sign an Agreement in Exchange for a Severance Package?

If your employer is intimidating you to sign an agreement, or you 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. For example, if your contract specifies you are eligible for two weeks of severance for each year of employment, and the contract does not mention giving up your right your employer cannot withhold payment.

The only time an employer should request you to sign a release in exchange for severance is if they offer you a package without being required to do so. When in doubt pursue legal help for severance pay inquiries in Los Angeles.

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 larger 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. To minimize tax payments, discuss a payment plan with your employer. If you split the severance amount over two tax years instead of receiving it as a lump sum you will benefit in the long run. While searching for your next job, maximize all opportunities where you can save money.

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 the following ways:

  • You have a written or oral contract stating you will be paid upon termination
  • The employee handbook mentions severance is offered to laid off or fired employees under specific circumstances; if it is explicitly clear the court may enforce it
  • The employer has provided former workers with final payment in the past, which led you to believe it was a part of your arrangement. With the help of a severance dispute attorney in LA, you must be able to prove:
    • Which employees were paid
    • How much they got paid
    • Reasons why they left the company

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.

21 or 45 Days to Sign: What is the Difference?

Generally, employees are offered 21 days to sign and accept a severance package. However, special rules apply to elderly workers when they must sign a release or waive their legal rights against an employer. A federal age discrimination law protects employers older than 40 as they make this crucial decision.

Under the Older Workers Benefit Protection Act (OWBPA), your employer is required to give you at least 21 days to consider the deal. However, you are entitled to 45 days if it is a part of a retirement incentive program. If the company violates your rights, you have legal grounds to sue.

Whether you have 21 days or 45 days to sign, the employer is required to offer seven days to revoke your decision. You can expect to receive payment after you accept the deal.

Are Employee Rights Worth Giving Up for A Severance Package?

If you are considering accepting the deal, we recommend talking to an employment lawyer in LA. The sooner you seek legal advice you will be able to determine if accepting a severance package is the right choice for you. If you have or plan to file a claim against the company, you may receive higher compensation upon the success of your case in court. A lawyer can help you negotiate a more generous deal if you suspect you need to give up your rights for payment.

About Mann & Elias

The Law Offices of Mann & Elias is an employment law firm that provides guidance and legal support for individuals facing issues in the workplace. We represent clients at every level of the state and federal court systems in lawsuits regarding discrimination, wrongful termination, unpaid wages, and more. When your case is in our hands, we hope to minimize stress and concerns associated with work.

Workplace disputes and negotiations can be complicated and uncomfortable between an employee and employer. In many cases an employer can retaliate, causing individuals to feel that they are at a great disadvantage in the company. When you retain one of our lawyers, you will be well-protected and advised. While there are thousands of lawyers to choose from, we strongly believe our success is based on:

  • 50+ years of trial experience
  • Excellent advocacy skills
  • Intense preparation and research
  • Quality care

Since our partnership began over 20 years ago, we have settled hundreds of claims, completed 100 jury and bench trials, and recovered more than $18 million in settlements. In the end, our goal is to understand what you need and achieve the best outcome for you by focusing on those needs. For dedicated representation with no upfront fees, give us a call at 323-866-9564 or email


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