Not Sure About Your Severance Package? Our Attorneys Can Help.

Losing a job is never easy, but understanding your rights regarding severance packages can help you navigate this challenging time. A severance package is often offered to employees who are laid off, terminated, or voluntarily leave their positions. 

Severance packages can be a critical lifeline when facing job loss, but what happens when you don’t receive the severance you’re entitled to, or if the terms are unfair? In some cases, the only recourse is to file a severance lawsuit to protect your rights and secure the compensation you deserve.

If you believe your severance has been mishandled, contact Morgan & Morgan today for a free case evaluation to learn more about your legal options.

What Is a Severance Package?

A severance package is a financial arrangement provided by an employer to an employee who is leaving the company, usually through no fault of their own. This package may include a combination of monetary compensation, benefits, and other forms of assistance. Severance packages are not legally required in most cases, but they are often offered as a gesture of goodwill or as part of an employment contract.

Severance packages can vary widely depending on the employer, the employee's position, and the circumstances of the separation, but often they can include:

Severance Pay

This is the most critical element of a severance package. Severance pay is usually calculated based on the length of time an employee has worked for the company. It is often expressed as a set amount of pay per year of service (e.g., two weeks' pay for each year of service). The total amount can vary, but it is meant to provide financial support while the employee searches for new employment.

Continued Benefits

In addition to severance pay, many severance packages include continued health insurance coverage, often under the Consolidated Omnibus Budget Reconciliation Act (COBRA). This allows employees to maintain their health insurance benefits for a limited period, though they may have to pay the full premium.

Pension and Retirement Benefits

Employees close to retirement may receive additional pension or retirement benefits as part of their severance package. This could include accelerated vesting of retirement plans or lump-sum payments.

Outplacement Services

Some companies offer outplacement services to help employees transition to new jobs. These services may include resume writing assistance, job search support, and career counseling.

Stock Options or Equity

For employees who have been granted stock options or other forms of equity, the severance package may address the vesting and exercise of these options. Some packages may accelerate the vesting schedule or extend the time frame in which the employee can exercise their options.

Non-Compete and Non-Disclosure Agreements

Severance packages often include legal agreements that the employee must sign to receive the benefits. These agreements may include non-compete clauses, preventing the employee from working for a competitor for a specified period, or non-disclosure agreements (NDAs), which prohibit the employee from sharing confidential company information.

Vacation and Paid Time Off (PTO) Payouts

If the employee has accrued vacation time or PTO, the severance package may include payment for any unused days.

Reemployment Assistance

Some severance packages may provide financial incentives or assistance to employees who find new jobs within a specific timeframe.

What Is a Severance Lawsuit?

A severance lawsuit arises when an employee believes they have been wrongfully denied severance pay or when the terms of a severance package are unfair or violate the law. These lawsuits can also occur when an employer fails to honor the severance terms outlined in an employment contract or if the severance agreement includes illegal or unenforceable clauses.

Severance lawsuits typically focus on securing the severance pay and benefits an employee is owed and may also seek damages for any additional harm caused by the employer's actions.

Severance lawsuits can be triggered by a variety of issues. Below are some of the most common reasons employees file these types of claims.

Breach of Contract

If an employment contract or company policy guarantees a severance package and the employer fails to provide it, the employee may have grounds for a breach of contract lawsuit. This is especially common when the contract specifies certain severance terms, such as the amount of pay, duration of benefits, or other compensatory measures.

Unfair or Discriminatory Severance Offers

Employers cannot offer severance packages that are unfairly discriminatory. For example, offering lower severance pay to older workers or workers of a specific gender or race could constitute discrimination. If an employee feels that the severance offer was influenced by discriminatory factors, they may have a valid claim.

Retaliation

An employer may wrongfully withhold or reduce a severance package as a form of retaliation against an employee who has filed a complaint, reported misconduct, or exercised their legal rights. Retaliation is illegal, and employees who experience it may be entitled to compensation through a lawsuit.

Violation of WARN Act

The Worker Adjustment and Retraining Notification (WARN) Act requires employers to give 60 days’ notice in the event of a mass layoff or plant closure. If an employer fails to comply with the WARN Act and does not provide severance pay or other compensation, affected employees may file a lawsuit to recover their lost wages and benefits.

Coercive or Unlawful Severance Agreements

Some employers may attempt to include coercive or unlawful terms in severance agreements, such as overly restrictive non-compete clauses or NDAs that prevent employees from reporting illegal activity. If an employee signs such an agreement under pressure or without fully understanding its implications, they may have grounds to challenge it in court.

Unpaid Benefits

In addition to severance pay, employees may be entitled to other benefits such as accrued vacation time, bonuses, or stock options. If an employer fails to pay out these benefits as part of the severance package, a lawsuit may be necessary to recover what is owed.

Can I Still Sue My Employer After Accepting a Severance Package?

Yes, you can sue if the severance package did not include a release. However, if you signed a release, suing becomes more difficult. A release of claims clause prevents former employees from suing their employer for any employment-related issues that may have contributed to the termination. However, not all severance agreements contain these clauses, and even if the contract does contain a release of claims clause, it may be invalid.

What if I Was Denied My Severance Package?

If you believe you have been wrongfully denied severance pay or that the terms of your severance agreement are unlawful, there are several steps you can take to fight this.

Firstly, carefully review your employment contract or any written agreements you have with your employer regarding severance. Look for any clauses that outline the conditions under which severance is to be provided.

Keep detailed records of all communications with your employer regarding your severance package. This includes emails, letters, and notes from meetings or conversations. Documentation is crucial in building a strong case.

Before taking any legal action, consult with an experienced employment attorney at Morgan & Morgan, who can help you understand your rights and assess the strength of your case. Our employment attorneys can also help you negotiate with your employer to resolve the dispute without going to court.

If your employer presents you with a severance agreement, do not sign it without consulting an attorney. Some severance agreements include clauses that waive your right to sue or that impose unreasonable restrictions on your future employment.

If negotiations with your employer do not result in a fair resolution, Morgan & Morgan can help you file a claim or lawsuit to seek the severance pay and benefits you are owed.

How Can Morgan & Morgan Help?

Morgan & Morgan is dedicated to protecting the rights of employees who have been wronged by their employers. Our experienced employment law attorneys have a proven track record of successfully handling severance disputes and can help you navigate the complexities of a severance lawsuit.

With over 35 years of experience, Morgan & Morgan has grown into the largest personal injury law firm in the country, with offices in every state. Our army of over 1,000 lawyers fights For the People, not the powerful, and have recovered over $20 billion for our clients.

If you work with Morgan & Morgan for a severance dispute, our attorneys will help you understand your rights and the options available to you. We will conduct a comprehensive review of your employment contract, severance agreement, and the circumstances surrounding your job loss to determine if you have a viable claim.

We are committed to fighting for your rights and will aggressively pursue the compensation and benefits you deserve, whether through negotiation or litigation. We also believe everyone deserves access to quality legal representation, which is why we work on a contingency fee basis. You won’t pay anything unless we win your case.

If you believe your severance rights have been violated, taking legal action may be the only way to secure the compensation and benefits you’re entitled to. A severance lawsuit can be complex, but with the right legal support, you can fight back against unfair treatment and protect your financial future.

Morgan & Morgan is here to help you every step of the way. Hiring one of our lawyers is easy, and you can get started in minutes with a free case evaluation.