When faced with an unexpected job loss, receiving a severance package might provide some financial comfort. Yet, this package, often presented during a turbulent time, can be challenging to understand fully. Knowing its components and your rights can provide clarity and possibly better terms.
Keep reading to get the basic facts it’s important to know. Then contact PLBH at (800) 435-7542 if you need to speak to an employment law attorney.
Breaking Down the Severance Package
When your employment comes to an unexpected end, companies might present you with a severance package. This package typically consists of compensation and other benefits offered when you’re let go from a position. Though not mandated by the Fair Labor Standards Act (FLSA), many companies opt to provide it. The motive behind such a gesture isn’t solely goodwill. Firms often use this as a tool to safeguard their reputation and to acquire a legal release from potential claims.
For employees, knowing what should be in the package and how to negotiate its terms can be empowering during a period of uncertainty.
Key Components of a Severance Package
The primary element of any severance package is financial compensation. Details like payment amount and method, compensation for unused leave, and where to get information on unemployment benefits, including COBRA, should be clearly outlined. COBRA, or The Consolidated Omnibus Budget Reconciliation Act of 1985, enables you to retain health insurance even after termination.
Apart from benefits, the package will contain clauses that favor the company. Expect stipulations about returning company assets, keeping business information confidential, refraining from negative comments about the company, and waiving rights to legal claims against the firm.
Deciphering Severance Pay Calculation
Understanding how the compensation in your severance package is derived can aid in assessing its fairness. Generally, the calculation is based on your usual salary.
For hourly workers, the typical method is multiplying your average weekly earnings by the tenure at the firm. For those on a salary, it’s often a multiplication of an average of two weeks’ salary by years of service.
Alternatively, some businesses might offer to continue your regular wages for a designated post-termination duration. The disbursement could be as a one-time payment or spread over several weeks or months.
Negotiating Your Severance Terms
Believing that your severance offer is not equitable might lead you to consider negotiations. Either independently or with legal counsel, prepare your negotiation strategy. Reflect on your duration with the firm, the value you added, your knowledge of what others have received, and the expected time it might take you to secure a new position.
One vital consideration is the legality of your termination. If there’s a possibility that your exit is due to reasons protected by law, like age, gender, race, or for any discriminatory or retaliatory purposes, consult with an employment lawyer immediately. Your or your attorney’s understanding of these factors can be instrumental in securing a deal that might sustain you till your next employment.
Health Insurance Considerations
Should your severance package omit health coverage, turn to the provisions of COBRA. This act allows most laid-off employees from firms with 20 or more staff to continue with their existing health coverage. However, under COBRA, you’d bear the full premium, although it might be less than an individual policy’s cost. This continuation is typically available for up to 18 months, as long as you don’t join another organization offering health benefits.
Severance and Unemployment Benefits in California
While in certain states a severance package could influence unemployment benefits, California residents are in a favorable position. In California, your severance pay won’t interfere with your unemployment benefits.
Armed with this information, you’ll be better positioned to navigate the complexities of a severance package. While it’s essential to act in your best interest, always consider consulting with professionals, especially when significant sums or legal rights are at stake. Reach out to PLBH at (800) 435-7542 for comprehensive guidance.