Severance packages are generally offered to employees whose positions are eliminated due to downsizing or restructuring. California does not mandate any kind of severance package from employers beyond the final pay. If you are concerned that layoffs are coming or have just experienced job loss and a severance package offer, you may wonder what to expect or how yours compares to the standard. The difficulty with assessing against the standard is that there isn’t much of one to provide. If you have concerns regarding the terms of your severance package or whether it seems fair, you may greatly benefit from speaking with a San Francisco wrongful termination lawyer from The Armstrong Law Firm. We can discuss your employment details and consider the most appropriate path forward regarding your termination and severance package.
Severance Package Factors
Because California does not regulate or mandate severance packages, they can vary dramatically. However, there are some common considerations and components of a decent package that you might expect to see in most offers. First and foremost, a severance package is a tool to minimize the liability of lawsuits against the company, so these may often be negotiated.
Company History
A more standard formula for a severance amount is based on your tenure at the company. Many employers will provide one week of current pay per year worked, and some may provide up to four weeks per year worked. Other components of your history with the company that may affect your package are your position or salary.
Vacation Time
A common component of a respectable severance package is the payout of unused sick or vacation time. Since this is generally considered part of your ‘compensation package’ when you begin, it makes sense that it would also be considered when determining your severance. If it is not included, you may be able to negotiate for it.
Benefits Package
Just like your vacation time, your benefits package may also be considered when discussing your severance pay. Considering a benefits package in severance pay, it may look like an employer who continues the health insurance benefits for an agreed-upon time. They may also retain access to additional company perks like gym memberships or EAP programs for a specified amount of time.
Severance Pay Guidelines
Similar to California, there are no federal guidelines or requirements for severance pay. The Department of Labor(DOL) iterates that a severance agreement is one between the prior employer and the employee or their representative. The DOL may assist in taking a complaint regarding stolen wages if your final pay is withheld or inappropriately delayed. This includes a delay in final pay because your employer is withholding pay until you sign a severance offer, which is illegal.
Severance Agreement Enforcement
The severance agreement is legally binding, but compliance is not enforced by any state or federal governing agency. If you have concerns regarding your employer’s fidelity to the agreement, you may benefit from speaking with an attorney. These cases can generally be handled with a civil suit with help from an employment law firm.