Employment

Are Fired Employees Eligible for a Severance Package?

are-fired-employees-eligible-for-a-severance-packageSeverance usually takes the form of pay and/or benefits that an employee receives once s/he leaves a company. Often severance takes the form of pay for unused vacation time, compensation for a late notice period, and some form of retirement benefit.

Severance Pay in California.  Are employers in California, though, required to make severance payments? Well, California calls severance pay “separation pay” or “termination pay” and typically doesn’t require it from employers.

By whichever name it takes, severance pay is not completely guaranteed in California, but you could receive some compensation if you were, for instance, involved in a mass layoff or signed a contract guaranteeing you severance pay.

Who’s Entitled to Severance?  Severance compensation is sometimes given to employees in California who have been terminated or who have decided to leave a company after years of gainful employment.

In many cases severance pay acts as a life raft to keep California’s recently unemployed afloat financially. The additional months of income can help someone recently unemployed make utility, mortgage and other kinds of basic payments.

As a general rule of thumb, though, an employer in California is not legally obligated to give his or her employees severance packages. The exception to this rule would be an employer-employee contract that stipulated a severance package.

Likelihood of Receiving Severance.  More often than not, severance packages are given to employees based on the employer’s capacity to make future severance payments.

Many employers, especially those running small businesses, simply cannot make severance payments and, therefore, omit severance packages from employment contracts.

Two other factors that may determine your likelihood of receiving a severance package in California are employment history and the way in which you left the company.

If you’ve been with the company for fifteen years, as opposed to two years, you’re more likely to receive a severance package.

Additionally, if you left the company and your employer on good terms – as opposed to a termination because of some workplace negligence – then you’re also more likely to get a severance package from your employer.

That said, employers in California are usually not legally obligated to make severance payments.

When Will You Receive Severance?  If your employer worked in a severance package into the employment contract that you signed with your employer, perhaps as an incentive to take the job in the first place, then you are legally entitled to receive severance.

In California, as in other states, severance payments could be much more than simply the employer thanking the employee for years of hard work.

Severance can, in some instances, preclude an employee from working with a company’s economic competitor or prevent a terminated employee from receiving unemployment compensation.

WARN and Compensation in California.  The Worker Adjustment and Retraining Notification Act (WARN) is a labor law in the United States that helps to protect terminated employees and their families from mass layoffs.

Specifically, an employer must provide 60 calendar days or more of advance notice to employees before mass terminations or disruption of plant operations, provided the employer employs more than 100 individuals.

In the state of California, if certain employers fail to give 60 calendar days of advanced notice, then California ex-employees may actually be legally entitled to receive severance payments for months after employment.

Summing Up California Severance.  In most cases severance is determined by how long the employer has been with the company and the employers financial ability to make severance payments.

An employer in California is usually not required to provide severance. Exceptions are mass layoffs protected under WARN and employment contracts that stipulate severance payments upfront.

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