Severance Pay: What are My Rights?

December 13, 2015

Severance pay is typically part of a benefits package some employees receive when they leave employment. They can include benefits such as several months’ salary, payment for unused vacation or sick time, continued medical, dental or life insurance coverage, retirement benefits, stock options, and help finding new employment.

There is no requirement for severance under federal or Georgia state law, including the Fair Labor Standards Act (FLSA)— the federal law that sets minimum national standards for wages. Some states pass laws that provide employees with more protections. New York’s state law increases protections for employees in New York State. New York City has gone even further by passing laws that are even more stringent. However, not even New York or New York City require that employers provide severance pay or benefits to employees when they leave employment— whether they leave voluntarily or involuntarily. Georgia has not passed any additional laws regarding wages; therefore, the federal standard is the same as the state standard.

Severance packages are voluntary; they are a matter of agreement between employer and employee. Severance packages may be offered for several reasons, such as when employees are laid off, retire, or when there is a significant change in job duties or the company’s business. The length of severance pay (like any other term of the severance) is negotiated by the employer and employee. It’s often based, in part, on the employee’s length of service and the circumstances surrounding the employee’s departure. In order to receive a severance package, some employers may require employees to sign a non-disparagement clause or a non-compete agreement for a set period of time. An employee can also attempt to negotiate continued health insurance with the same health care he or she had with his or her employer. Nothing prohibits an employer from paying the premiums as part of a severance package. Employees can also negotiate and get their employer to agree to not oppose their unemployment claim. It is important to know that like any contract, severance agreements are negotiable. In fact, most employers offer them because they want the certainty of closure when an employee leaves.

Employees may have some additional rights if:

• The employee has a contract with their employer or if he/she is covered by a collective bargaining agreement, which governs what happens if her employment is terminated
• The employee manual states that the employer will pay severance upon termination
• The company has a long history of the company’s paying severance to other employees in your position

If you have questions about whether you should seek severance or about the terms of your severance agreement, you should contact a lawyer to assist you.