While the economy is good at the moment, some companies are not so lucky. Some businesses cannot compete in the current market. As a result, many are forced to close down, leaving employees without jobs and income.
Layoffs happen in companies of all sizes. Nobody is immune. Many employees are under the impression that they will receive a severance package any time they are laid off. While many companies do offer severance packages as a gesture of goodwill, not all are required to. Read on to learn more about the laws surrounding severance packages.
What is a Severance Package?
A severance package is a combination of pay and/or benefits given to employees when they leave a company, typically via a layoff. A severance package typically includes payment based on years of service. For example, some companies offer one week of pay for each year a person is employed with a company. Management may receive two weeks for every year of service. They may provide this as a weekly payment or a lump sum.
Any vacation time or PTO accrued by the employee is typically paid out once they leave the company. Some companies also offer a continuation of health insurance and other benefits. This is up to the company’s discretion. A severance package is negotiable in some cases, so you can try to negotiate a higher sum of money or perhaps keep your benefits for a longer period of time.
When is a Severance Package Required?
There are no federal laws that require employers to provide laid-off employees with severance packages. State laws vary in this regard. In New York, when a company undergoes a mass layoff (100 or more people), the company is required to provide 90 days of severance pay in lieu of a 90 days termination notice.
Also, if there are past practices in place, such as severance packages given to employees who have been with the company for more than five years, for example, then you should be entitled to pay if you meet the requirements.
Other than that, there are no circumstances in which a severance package is absolutely required. A terminated employee is not entitled to severance pay. However, many employers do offer them anyway in order to avoid a lawsuit. By taking the severance package, an employee cannot sue the company later on or even speak negatively about the company.
Many people are hesitant about accepting a severance package because they believe that they will lose out on their rights to unemployment benefits. This is not true. A person who receives a severance package is still eligible for benefits.
Contact a New York Employment Contract Attorney
Severance pay is not always required in the event of a layoff. However, if your company meets the requirements for severance pay, and you do not receive a package, you may be able to file a claim against your employer.
Losing a job is tough financially. Do not lose out on your rights to compensation. Seek help from the experienced New York employment law attorneys at Ricotta & Marks, P.C. We can help you understand your rights and legal options after losing your job. Schedule a consultation by calling our office at (347)-464-8694.