Severance in New York City

Leaving your job is almost always a source of stress, even if you are quitting your current job because another employer offered you a better one, and even if you always knew when the job was going to end, because you agreed to it when you signed your employment contract.  Sometimes employees received an additional bonus with their final paycheck; in certain contexts, this is known as severance.  In the best-case scenario, severance pay is a nice bonus with which you can buy yourself some new clothes or a new car to start your new job in style.  Most of the time, though, workers who get offered severance pay are the casualties of layoffs and corporate downsizing, and the severance pay is simply a consolation prize that does not offer much consolation.  In the worst instances, severance offers are simply a way for your employer to distract you from filing a wrongful termination lawsuit, much like the scene in Jurassic Park where the nerdy computer scientist throws a stick in a lame attempt to engage the Dilophosaurus in a game of fetch before it eats him.  The New York City severance lawyers at HKM Employment Attorneys LLP can answer your questions about severance pay and separation agreements.

Is Your New York City Employer Required to Give You Severance?

Severance is a payment that an employer makes to an employee at the end of the employee’s tenure with the employer. Most of the time, employers are not required to pay severance at the end of the employment relationship. Whether an employer pays severance, and whether they are obligated to, depends on the details. Specifically, it depends on the context in which the employee was hired.

New York, like most states, allows at-will employment. In an at-will employment state, either party can terminate the employment relationship at any time and for any reason; the only exception is that the employer cannot fire the employee because of a protected characteristic of the employee, because that would be discrimination, and the employer also cannot fire the employee as a result of the employee engaging in a protected activity, because that would be retaliation. When a company is conducting layoffs, they sometimes offer severance pay to employees as part of a separation agreement, but the law does not require them to do this.  Employers might offer severance pay to at-will employees as a courtesy, or they might do it to protect themselves from liability in the form of wrongful termination lawsuits.  The severance pay that at-will employees get is usually equal to several months’ salary, as well as continuing to provide health insurance benefits for several months.

If you have an employment contract, however, then the key to whether you are entitled to severance pay is in the details of your contract. Remember that when an employer and an employee sign an employment contract, they have the right to agree to almost anything, as long as it is not unconscionable or illegal. If the employer promised you certain money or benefits at the end of the contract period, they must pay it to you, whether you call it severance or an end of service bonus. The same goes for if the contract requires severance pay if the employer terminates the relationship before the expiration of the contract. Even if the contract does not indicate remedies for early termination, the employer might offer you a separation agreement as part of an anticipatory breach to prevent you from suing for breach of contract.

Under What Circumstances Do Employers Offer Severance in NYC?

Employers do not offer you severance pay when you quit. They also do not offer you severance pay if they fire you because you were terrible at your job and caused the company to sustain major financial losses. Employers offer severance pay when the decision to terminate the employment relationship came from the employer and when the employee did nothing wrong that would justify firing them. Whether you think the employer is doing it to be fair to you and to pay you what they afford or, conversely, doing it to protect themselves from getting sued when it would be reasonable for someone in your position to sue them depends on whether you are an optimist or a pessimist.

If Your New York Employer Offers You Severance Pay, Should You Accept it?

Unless you are receiving severance pay as indicated in a pre-existing employment contract, then you cannot receive the severance pay until you sign a separation agreement. The contractual obligations in a separation agreement are that your employer promises to pay you the severance amount, and you promise not to sue. If you did not have any valid reason to sue your employer, then your employer probably would not offer the separation agreement. Severance pay in the context of separation agreements is akin to your employer trying to settle a lawsuit before it happens.

Deciding whether to accept severance pay pursuant to a separation agreement is a lot like deciding whether to accept a settlement offer from the insurance company after a car accident.  Once you sign and accept the money, you lose the right to sue. Before you sign the separation agreement, you should discuss it with a lawyer. Your lawyer can help you figure out if you have the right to file a lawsuit against your employer based on discrimination, retaliation, wrongful termination, or breach of contract. If your employer asks you to sign the agreement on the spot, it is a red flag; you should not accept a separation agreement if your employer does not give you a chance to review it with a lawyer.

Contact HKM Employment Attorneys, LLP About Severance Pay in New York City

The New York City employment lawyers at HKM Employment Attorneys, LLP can help you negotiate for better severance pay and resolve other matters related to termination of employment. Contact the employment lawyers at HKM Employment Attorneys LLP in New York, New York to set up a consultation.