Severance pay is workers’ compensation offered to an employee after termination. A sole-proprietorship business or a PLLC may offer this compensation. Although severance pay varies from one firm to the other, some factors that may determine the package you will receive include:
- Duration of employment
- Employee weekly earnings based on the minimum wage
- The position you held in the workplace
- The status of the firm
- The terms of your employment contract
- Past severance packages offered by the employer
Despite many employers offering severance pay, no federal laws or employment law require them to do so. Legally, an employer is only required to provide a terminated employee with their unpaid wages and unemployment benefits.
However, many employers offer a severance package to maintain a good relationship with their former employees and protect their public image from being tainted. These sometimes take the form of a separation agreement.
When Are You Legally Entitled to a Severance Package?
According to the labor laws of some states, employers are required to give terminated employees severance pay if the termination occurred due to the company closing down, or if the firm is terminating many employees. However, Arizona law doesn’t have such a provision.
Nonetheless, if you work in areas such as Tempe and Scottsdale in Maricopa County, Arizona employment law requires employers to offer a severance package if they led you to believe that they would offer such a package. This may be evidenced by:
- A severance pay promise found on a written employment contract
- A severance pay promise found in the company’s employee handbook or personnel policies
- A severance pay promise made orally by the employer to the employee
What Does a Severance Package Offer?
Severance pay can be in the form of cash. However, there are instances where other benefits may be included. Some of the common benefits include.
- Cash payment
- Insurance benefits
- Promise not to contest employment benefits.
- References offered by your employer to increase your chances of getting a new job
- Outgoing employee services such as outplacement programs to help you find a new job
- Non-compete agreements where you agree not to start or enter in a competing business within a given location and duration
Can I Sue My Employer for Wrongful Termination after Accepting a Severance Package?
You may be required to sign a severance agreement that waives your right to sue the employer before the release of your severance package. This is a common tactic used by Arizona employers that suspect they have a whistleblower in their midst. A severance payment that requires you to sign a release can be used as a defense tactic by firms committing fraud. Keep in mind that a severance agreement is enforceable in a court of law.
If you have to sign a severance agreement, it’s best to visit the law offices of an experienced employment lawyer to get counsel on whether you should sign a release. If you have already signed the agreement, the attorney will advise you on whether you can still file for a discrimination lawsuit with the Equal Employment Opportunity Commission (EEOC) if you feel you were discriminated during your termination because of your age, national origin, or religious beliefs.
How Can an Employment Law Attorney Help?
An employment attorney will help you to determine if the severance package offered adheres to all applicable employment laws and severance pay laws.
Consult law firm at HKM Employment Attorneys in Phoenix. With experienced employment law attorneys, HKM Employment Attorneys can provide legal advice on legal issues related to your severance pay.