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Severance Agreement FAQs
Contents
Must
employers provide severance pay?
If my employer has a severance plan, do I get benefits?
I have to agree not to sue to receive severance pay. Can they
do that?
Why do I have to wait 21 (or 45) days to accept my agreement?
What happens if I ask for a
better package?
I do not know what my rights are worth. What should
I do?
Are there any "rules of thumb" for how much severance
an employer will pay?
How
do I learn more about this topic?
Severance Agreement FAQs
Q: Is
there a law that requires employers to provide severance
pay?
No. An employer has no obligation
to provide severance pay. The only benefit that employers
must by law provide is unemployment compensation.
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Q: I
heard that my employer has a severance plan. If so, am
I entitled to benefits?
If an employer creates a severance
plan, the employees covered by the terms of the plan are entitled
to the benefits that the plan provides upon the occurrence
of the event that triggers benefits. However, an employer
may create, modify or abolish a severance plan as it sees
fit. Most employers choose to have no severance plan at all.
If your employer has a severance
plan, you are entitled to a written summary description of
it. The plan description will tell you what, if anything,
you are entitled to receive.
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Q: My
employer offered a severance agreement to me, but I have
to agree not to sue my employer in order to receive any severance
benefits. Can they do that?
Yes. So long as the employer
writes the plan to condition a release of rights (i.e.,
a promise not to sue) on payment of any severance benefits,
you must agree not to sue your employer in order to receive
them.
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Q: The
severance agreement offered to me gives me 21 (or 45)
days to consider it. What does this mean? Can I accept it
before that time?
In order for your promise not
to sue for age discrimination to be enforceable, employers
must give you time to consider any offer. This is designed
to prevent "gun to the head" decisions by employees.
As a legal matter the employer cannot rescind the offer during
the waiting period, giving you time to consider it. However,
the waiting period is for your benefit. Generally speaking,
if you want to accept the offer before the end of the waiting
period, you can do so.
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Q: What
happens to the waiting period if I ask my employer for
a better package?
Technically, once you ask for
a better package you have "rejected" the employers
offer by making a "counteroffer", which the employer
can accept or reject. Therefore, you run the risk of losing
the guaranteed offer by making a counteroffer. However, in
practice most employers will not rescind their offer if you
make a counteroffer, but will leave their original offer on
the table if they do not want to negotiate it. To be clear,
though, you must be prepared to lose the offer if you make
a counteroffer.
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Q:
I am inclined to accept
the severance package, but I do not know what, if anything,
my rights are worth that I will be giving up. What should
I do?
Consult legal counsel to evaluate
any claims that you may have. Find out what your claims are
worth if you were to win, the chances that you have of winning
and the attorneys' fees and court costs that you will pay
in an effort to win. You should then compare this (plus the
aggravation and uncertainty of litigating) to the benefits
offered by your employer.
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Q:
Are there any "rules of thumb"
for how much severance an employer will pay?
No, but we will offer some anyways..
Again, an employer has no obligation to provide severance
payments. Employers rarely offer severance pay to hourly workers.
Employers who offer severance will typically provide
one week per year of service to employees below the officer
or executive rank, and up to a month per year of service to
executives and officers. In addition, some severance plans
cap benefits at a specified level, such as one week or month
of severance pay for the first 18 years of employment
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Check Fortney & Klingshirn's
Employment law legal links for the actual discrimination laws
and other employment related sites.
You can also contact us with
a specific question. We do not guarantee an answer and
charge $200.00 for an initial consultation. We therefore
look at our email inquiries as an opportunity to help you
decide whether a consultation makes sense for you.
We look forward to hearing from you.
Fortney
& Klingshirn
4040 Embassy Parkway, Suite
280
Akron, Ohio 44333
telephone 330-665-5445 - fax 665-5446
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