What Severance Pay Packages Are Employees Entitled to – As Layoffs Continue to Mount?

A recent CNBC report examined a variety of severance pay issues such as when you’re entitled to one, the difference between a furlough and a termination, and what are typical severance pay packages.

The numbers are staggering. 6.6 million workers filed unemployment claims in one recent week. The previous highs were 695,000 in October 1982 and 665,000 during the Great Recession. Many workers are just beginning to question how severance pay and benefits packages work and whether they’re entitled to one. The Federal Reserve estimates that as many as 47 million people may lose their jobs before the end of the COVID-10 crisis.

Furlough versus termination

According to the Society for Human Resources and Management, the right to severance pay depends on how a worker was laid off. Temporary furloughs do not result in severance packages. A furlough is a freeze which means the worker is still an employee who can be called back to work. Workers who are furloughed may, then, be entitled to their current benefits – such as medical, vision, life, and dental insurance. The Society for Human Resources and Management states workers can also seek unemployment benefits.

It is likely that companies will not keep workers on furlough for a long period of time because of the cost of the benefits.

When severance pay is available?

If a furlough becomes permanent or a worker is completely let go, they should understand that severance pay is generally not mandatory (unless there’s an employment contract agreement already in place). Many companies don’t have severance pay.

  • Typically, workers who do get severance pay, get one or two weeks’ pay for each year they’ve worked for the company
  • Companies also may agree to severance pay if you have a wrongful termination claim. In today’s current environment, wrongful termination claims generally need to be strong to generate a severance offer. Wrongful termination includes being fired based on discrimination, sexual harassment, or some other reason.

Severance pay if there is an employment contract?

Severance pay packages may be due an employee if there is an employment agreement in writing. Most employees don’t have a written employment contract. The employees who do are usually higher-level employees such as managers, supervisors, people who serve on the board of directors, and officers of the company.

Some additional pay benefits

Some workers may be eligible for Pandemic Unemployment Assistance (PUA) such as qualifying workers who are self-employed or independent contractors. PUA benefits, generally cover workers who:

  • Are diagnosed with COVID-19 or COVID-19 symptoms
  • Live with a household member diagnosed with COVID-19
  • Provides care for someone with COVID-19
  • Quite their job as a direct result of COVID-19
  • Other qualifying reasons

People who can telework with pay generally won’t qualify for PUA benefits. Nor will workers who are receiving sick pay or other paid leave benefits.

Understand your severance pay rights and other employment rights. Contact the California Law Offices of Stephen A. Danz and Associates to review your rights and to determine if you have a legal claim against your employer. You can schedule an appointment by calling us at 877-789-9707 or by completing our online contact form. Se habla espanol