Am I Entitled to Severance If I Am Laid Off Or Fired?

The simple answer is no.  Neither federal law nor state law requires your employer to pay you severance if you are let go, no matter how long you worked there.  Despite this, many employers do pay severance.  Why?  Simple, they want you to sign the waiver and release that is tied to the severance so that you will not sue them later.

Employment Agreements & Severance Plans

The above does not apply if you have an employment contract that provides for severance in the event of a termination or if your employer has a severance plan (or other type plan that is meant to provide pay and/or benefits to employees that leave the company).  Employment contracts are enforceable under state law just like any other contract and severance plans are considered employee benefit plans and are protected by federal law (the Employee Retirement Income Security Act – aka ERISA).

Severance Agreement

Oftentimes employees are given a Severance Agreement when they are notified that they are being let go.   These agreements can be anywhere from 1-2 pages to 15 pages, depending on how much legal language the employer wants to put in there.  However, the critical language in any Severance Agreement is the waiver and/or release (sometimes it is also called an “Agreement Not To Sue”) – but whatever it is called, the effect is the same: to waive your right to sue your employer in the future in exchange for severance pay.  This is the important provision from the employer’s standpoint; if you sign the Severance Agreement you will be agreeing not to sue you employer for anything (with a few relatively unique exceptions).

The legal implications of any Severance Agreement can be critical, so it is always important to take time to review the agreement and make sure that you are understand the rights that you are giving up.  Losing your job can be shocking in it’s own right, so make sure to ask for time to review your agreement.  Your employer may pressure you to sign right then and there, but ultimately they likely won’t force you to do so – in fact, if you are over age 40, you have to be given at least 21 days to review the agreement; even if you aren’t over age 40, they likely won’t force you to sign it because then they are opening themselves up to the argument that you were coerced into signing the agreement under duress.

About Publius

"Publius” a former labor and employment litigation attorney in New York City with experience representing both management and employees in a broad range of labor and employment matters. As a "reformed" attorney, Publius is looking to provide the people of New York City with information that will educate them as to their legal rights and, if appropriate, connect individuals with attorneys that can assist them.
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