Employment Agreement Disputes About Severance: What Employees Need to Know

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A recent uptick in layoffs and firings means many employees may suddenly be forced to refresh their understanding of their employment agreement. Employees might be wondering what their severance package is, how soon it must be paid, and what other clauses might affect their employment and finances.

If you find yourself in a similar situation, here are some key things you need to be aware of as you navigate through an employment disruption.


Do companies have to pay severance for layoffs?

The U.S. Department of Labor states that there is no requirement under the Fair Labor Standards Act to pay severance in the event of a layoff. Whether or not your employer owes you severance is determined by your specific employment agreement.

However, the number of employers who offer severance packages is on the rise. A 2021 report found that nearly 64% of surveyed companies offer a severance package, up from 44% in 2019. In today’s uncertain economic climate, it’s difficult to predict whether companies will move away from severance agreements or if the upward trend will continue.

If you aren’t sure if you’re owed severance, review your agreement and look for specifics around this topic. You can talk with an employment lawyer for additional guidance on your contract.


What if I haven’t received severance after a layoff?

Again, a lot depends on your specific contract. But, if your contract states that you must receive a severance package within a certain time frame from your layoff and you haven’t received it, you should get in touch with an employment lawyer.

Twitter made headlines recently when employees alleged they didn’t receive their severance packages in the timeframe outlined in their contracts. Many of those employees are now pursuing legal action against the company.


Can I get severance if I voluntarily quit?

In most cases, you aren’t entitled to severance pay if you voluntarily resign your position. Some employment agreements do include clauses related to this topic, so it’s always vital to check your individual contract.

However, if you feel you were forced to resign because of discrimination or other workplace difficulties, you may be entitled to compensation. If your employer asks you to resign, that would be considered a forced resignation, and you should consult an employment lawyer.


Employment Lawyers in California

If you are interested in talking with a California employment lawyer, get in touch with the McGonigle Law team. We have decades of experience managing complex employment cases and advocating to ensure our clients receive what they are entitled to.

Our team won an arbitration award of over $3 million for a cryptocurrency entrepreneur in a misrepresentation and wrongful termination case against the plaintiff’s former company. You can read the full case study here.

The information contained herein is for general purposes only and does not constitute legal advice.

“McGonigle Law fights hard for your best interests. Bottom line is, I trust them. That is the highest praise I can give.“

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