When you are young, and someone pays you to get lost, it is an intoxicating feeling of liberation. Members of Generation X and the oldest Millennials have fond memories of one afternoon in April each year in the 1980s or 1990s when their parents would hand them approximately $20 and drop them off at the mall for the entire afternoon so the parents could have peace and quiet while they prepared their income tax returns. The teens could buy as much Orange Julius as they cared to drink and innumerable tokens at the video arcade; the parents would not normally permit an entire afternoon of such excesses, but letting your kids get a sugar high and temporarily rot their brains of video games beats a late filing penalty from the IRS. If it is your employer paying you to go away and leave them alone, the feeling is several orders of magnitude less exhilarating, even if the money is enough to pay for multiple days’ worth of smoothies and in-app purchases. If your employer tells you to go, then you cannot force them to let you stay. The question, rather, is whether the money they are offering you in exchange for your departure is adequate compensation. The Spokane severance lawyers at HKM Employment Attorneys LLP can help you answer this and other difficult questions about severance packages.
What is the Difference Between a Separation Agreement, a Severance Package, and an End of Service Bonus?
Severance pay is money that an employer pays to an employee when the employment relationship ends on the initiative of the employer. You do not get severance pay when you quit a job. No matter how bad your relationship is with your employer by the time you quit, the law requires your employer to pay you for all the time that you worked, even if you were performing terribly at your job or engaged in obvious misconduct. Your employer does not have the right to withhold your last paycheck under any circumstances.
Most severance packages occur in situations where employers must lay off multiple employees because of corporate mergers, restructuring, or downsizing or because the employer is suffering from financial hardship. The purpose of a severance package is to protect the employee from financial catastrophe while the employee looks for a new job to replace the job that he or she lost because of the layoffs. A severance package usually includes several months of paychecks at the employee’s usual rate of pay plus a continuation of employer-provided health insurance coverage for at least that long. It usually also includes a promise that the employer will provide a good reference for the employee if asked for a reference by other prospective employers with which the employee applies for a new job.
Usually, but not always, the employee must sign a separation agreement in order to receive the severance package. In a separation agreement, the employee declares that the employer was within its rights to terminate the employment relationship and promises not to sue the employer for wrongful termination of employment. Employers can offer separation agreements and severance packages regardless of whether the employee was working for the employer on an at-will basis or whether the employee was subject to an employment contract.
Some employment contracts include money and other compensation that the employer must provide to the employee at the end of the employment relationship, but this does not count as a severance package. If the amount that the employer pays at the end of the employee’s tenure is the same as the amount indicated in the contract, and if the employment relationship ends on the date specified in the contract, then this is an end-of-service bonus rather than a severance package. The compensation may be very similar, but there are several important differences between a severance package and an end-of-service bonus. If you know that your contract is non-renewable, then you will have already started interviewing for new jobs by the time your old employment contract ends. You might even start a new job the next business day after your last day at your old job. Therefore, the end-of-service bonus does not have to cover a period of time where you do not have a regular income. Likewise, a severance package comes at the price of waiving your right to sue your former employer, but an end-of-service bonus does not.
The Line Between Corporate Layoffs and Wrongful Termination of Employment is Not as Clear as You Think it is
The vast majority of employees who receive severance offers accept them, because if they do not, then they will be without a paycheck while they start a job search from zero. If your gut is telling you, however, that the reason your employer is letting you go is not just a garden variety case of the economic blahs, then you should listen to your gut, and you should talk to a lawyer. Employers call it many things when they fire an employee; they might say that they are moving in a new direction or that the company is experiencing growing pains. It is possible, though, that “corporate restructuring” might just be a euphemism for wrongful termination of employment.
If you think that your employer has an ulterior motive, then you should discuss matters with a Spokane employment lawyer. The termination of your employment might fit the definition of discrimination or employer retaliation, in which case you should think twice before giving up the right to sue. A lawyer can also help you negotiate for a better severance package if you have decided to sign the separation agreement but you need more severance money to get you through the next few months.
Contact HKM Employment Attorneys, LLP About Severance Pay
The Spokane employment lawyers at HKM Employment Attorneys, LLP can help you negotiate for adequate severance pay. Contact the employment lawyers at HKM Employment Attorneys LLP in Spokane, Washington, to set up a consultation.