The economic forecast may result in job losses across the country through the foreseeable future. Many long term employees may be facing the prospect of losing employment as we head into 2023. If you are facing termination and are offered severance pay, it is important to understand your rights before signing a release.
For example, if you are over age 40 and are terminated as part of a Reduction in Force (RIF), your employer is required to provide you with an easy to understand agreement with adequate time to consider the proposal. Employees should be encouraged to seek legal counsel and, even after an employee signs an agreement, they have seven days to revoke the agreement. The Older Workers Protection Act (OWBPA), enacted in 1990, seeks to ensure that employees fully understand their rights before signing an agreement in exchange for severance pay.
Whether an employee receives severance pay upon being terminated from their job often depends on whether an agreement exists between the employer and employee:
- a written contract laying out terms for severance pay an employee and employer entered into prior to termination
- an employee handbook that documents a policy for the payment of severance pay
- if an employer typically pays severance pay to employees in similar positions upon termination
- or an oral agreement promising an employee the payment of severance pay
Barring a legal right to severance pay, your employer is not required to offer severance pay, however, employers may choose to based on an employee’s length of employment and reason for the termination. Employers almost universally want to preserve their reputations as good employers that treat employees fairly.
What Can I Expect in a Severance Package?
Typically an employee might expect two weeks’ pay for every year of employment, but that may be subject to negotiation. It is helpful to work with an experienced employment law attorney to strike a favorable agreement, potentially yielding more severance pay and other benefits.
Health Insurance Coverage
Under the law, employers with 20 of more employers must offer employees and their families the option to continue healthcare coverage for a limited period under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Although employees are responsible for paying the full cost of coverage, some companies will continue to pay for an employee’s healthcare until they are able to secure employment as part of the severance package.
Employees often transfer their retirement plans following termination, however, an employer may allow employees to continue contributions as part of a severance pay package.
- An employer may offer job search assistance as part of a severance package, helping terminated employees find employment that match their skills, experience and interests.
- Bonus pay may be offered above the typical two weeks per year of severance pay often dependent on an employee’s time in service, contributions, and level of responsibility held during their employment.
- The use of an employee gym membership, the use of a company car, or allowing an employee to keep a company laptop may all be included in a severance package.
- Contact a Des Moines Employee Rights Attorney for guidance today.
The economy and forecast layoffs have many employees concerned about what the future holds. When you are facing termination of your employment and are offered a severance package in exchange for releasing an employer from liability, it is important to understand what you are giving up in exchange for signing while ensuring that you’re getting the most out of a severance package. Contact Des Moines employment law attorney Marc Humphrey for assistance with your with your employment questions today.