Some jobs pay employees if they are terminated from their positions, which is known as severance pay. Maryland does not guarantee severance pay when employment is terminated. In an at-will employment state, severance pay is only available in certain situations. However, depending on the circumstances of your employment, it may be available to you if you are let go from your job. To learn more, call or contact HKM Employment Attorneys, LLP today to schedule a consultation.
Types of Severance Pay
There are several different types of severance options after employees are terminated from a job. Some types of severance are more common than others in Maryland, and an attorney can help you discover the types for which you qualify. The types of severance include the following:
The first type of severance is simply no severance, and this is the norm after employment is terminated in Maryland. Unless stipulated otherwise, employment is at-will in Maryland, and as such, the employer or employee can end the employment for almost any reason at any time. Once the employment is terminated and the employer pays the wages earned to the employee, the obligation to pay an at-will employee ends. This includes the obligation to pay severance.
The next type of severance pay is unemployment compensation, which technically is not an official form of severance. Unemployment benefits provide a modest amount of compensation to employees who have been terminated without cause for a certain number of weeks. Employers pay taxes to the state unemployment benefit program, which terminated at-will employees can rely upon while they are in between positions. Unemployment benefits operate similarly to severance pay for qualified workers.
Severance Pay Plans
Severance pay plans are offered by employers to employees in the event of certain types of job loss, such as layoffs or a reduction in force. Typically, severance pay plans utilize a formula to determine the amount of pay based on the length of service for each employee.
This type of severance falls under the Employee Retirement Income Security Act (ERISA), and as such an employer is required by law to put the terms of a severance pay plan in writing as well as provide written summaries to covered employees. In addition, as an ERISA covered benefit, if an employer fails to provide the severance benefits or attempts to interfere with an employee’s right to it, a worker is allowed to file a claim in court for damages. Employers who create severance pay plans have the right to specify the terms, choose which employees qualify, decide what to pay, and when to pay. They can also modify or terminate a severance pay plan at their discretion and only owe severance from a specific triggering event.
It is important to note that union employees covered by a collective bargaining agreement may also negotiate a severance pay plan, but it is slightly different. This is known as a severance benefit, and while it is structured the same as a severance pay plan, this benefit is regulated by federal labor laws.
Voluntary Severance Pay
Some employers voluntarily pay severance to employees, especially those at the executive level. Voluntary severance is paid without any obligation to do so and can be done with or without requiring a release of rights by the terminated employee. This type of severance is not as popular as it once was, as the employer cannot expect much return on investment from voluntary severance; however, companies that do offer this type of severance pay often develop good reputations within their industry that often attracts higher quality talent to their organization.
Severance Bargained by Agreement
The last type of severance pay is severance bargained by agreement, and this is the most common type of severance pay today. Severance bargained by agreement can occur at the beginning or at the end of employment. At the beginning of employment, an employee can bargain for severance pay in their employment contract. Severance may be bargained for following a change in control of the company or for an involuntary termination without cause. Severance can also be bargained for if the employee resigns for good reason, such as resignation due to a change in working conditions, reduction in pay, demotion, or loss of responsibilities.
Severance bargained at the end of employment typically occurs when the employer wants a clean break from the employee. Severance can also be bargained at the end of employment if the employer wants a promise that the employee will not sue. This type of severance bargaining looks the same as any other contract negotiation, where the employer secures the right not to sue and the employee receives payment. Regardless of when the bargaining for severance pay occurs, if an agreement is reached and the employer fails to pay the employee can sue for breach of contract.
How a Baltimore Employment Lawyer Can Help
Hiring a knowledgeable employment attorney in Maryland can mean the difference between walking away from a position with severance pay and leaving with nothing. For employers willing to bargain severance at the beginning or end of an employment relationship, a lawyer can help negotiate favorable terms for the employee. If the employer fails to pay severance promised in a severance pay plan or bargained agreement an attorney can file a claim for damages with the court and take the case to trial, if necessary. Finally, if you are unsure of whether you are entitled to severance pay at your current or former position a lawyer can review the details of your case and answer any questions you have about your legal rights. To learn more, contact our attorneys today.
Contact an Experienced Employment Law Attorney in Baltimore
Severance pay can be the financial help that people need after being let go from a position. If you believe that you are entitled to severance from your former employer, let the experienced lawyers at HKM Employment Attorneys, LLP in Baltimore handle the case. Call the office or contact us today to schedule a consultation of your employment claim.