What Is a Severance Package?
After you have been laid off or fired from a job, you may wonder about your finances. Without a regular wage, it can be difficult to pay bills, buy food, or make rent. However, many New York employers offer severance packages to ease this financial burden.
Severance packages provide some compensation and benefits usually equal to some portion of your average wage. If you are offered a severance package you may feel relieved, but there are several considerations that you will need to review before you accept the offer.
Does New York Require Severance Packages?
In New York employers are not required to offer a severance package after firing or laying off an employee. Additionally, there are no rules or regulations on what the package should include. However, many companies do voluntarily offer these agreements to employees, usually executives and other higher-ranking positions.
What Does a Severance Package Include?
The contents of a severance package will vary based on what your employer offers to you. In some cases, your employment contract will outline what benefits and pay you will receive. Some employers base the package on how long you have been employed with the company and other factors.
While there are no standards that employers have to follow, many severance packages include the following.
- Separation Agreement: the separation agreement is a contract that you often need to sign before you can receive severance pay. This agreement usually explains the details of the package, discusses your obligations, and lists the last day of your employment.
- Severance Pay: The severance pay is a cash payment to you. Your employer can pay this sum all at once or in installments over time. There is no standard amount of severance pay that you could receive. Some people may get several years’ worth of pay, or a percentage of a single paycheck.
- Health Insurance Information: If you receive health insurance from your employer, you’ll receive information about your coverage in your severance package. Under federal law, your employer must provide you with the option of purchasing your own health insurance at the company rate for at least 18 months. Your employer may also continue your coverage for a few months following the end of your employment.
- Vacation Pay and Stock Options: if you have any unused vacation time that you have earned, your employer may offer to pay you for the hours that you have leftover. Additionally, if you had stock options, your employer will include information about your stocks’ current value.
What If Your Employer Does Not Offer a Severance Package?
Although the law does not require employers to offer severance packages, your employer may be obligated to provide one. For example, if severance information is included in your employment contract or if your company has an internal severance policy, they must honor it.
You may also be entitled to a severance agreement if you are a member of a union. Your union may have a collective bargaining agreement requiring your employer to offer you severance according to stated terms.
If your employer fails to offer you a severance package despite being required to, or offers you a package that you believe is inadequate, it is important to consult with an attorney as soon as possible.
A New York employment law attorney can carefully evaluate all of your contracts and the severance package details and determine if you are receiving an adequate offer. Speak to a lawyer as soon as possible to discuss your next steps.