When an organization terminates an employee due to job cuts or any reason other than a resignation or discharge for cause, the person receives severance pay.
Severance policies are generally consideredentitled to ERISA protection, many courts have ruled. For employers, this means conforming to ERISA’s recordkeeping and disclosure requirements.
Recommendation: If you have a severance pay plan or are thinking of establishing one, review the details with your legal adviser to ensure compliance with ERISA and to determine that the provisions are reasonable and legally sound—particularly if the policy will include waivers.
No federal law mandates severance pay. If you decide to offer severance or other benefits, consider making the payment or benefit contingent on the employee signing a release of any liability for employment discrimination. Just be sure that an attorney prepares the release because certain technical conditions must be met for such a release to be enforceable.
If you offer severance packages, don’t assume workers want money. With rising health care costs, employees are choosing less severance pay and more outplacement benefits, such as continued health coverage. You may want to negotiate noncash options into your severance plan. You could save money plus avoid legal trouble: A departing worker who feels that he or she squeezed some concessions out of you is less likely to sue later.
Also, don’t assume that taking a severance check always means that the employee can’t bring a complaint to the EEOC or that the agency won’t sue. In fact, the EEOC has filed federal lawsuits against employers challenging their right even to include an “I agree not to sue” clause in the agreement.
In EEOC v. Lockheed Martin Corp., 444 F. Supp. 2d 414 D. Md. (2006), the court ruled that Lockheed’s severance agreement was facially retaliatory. In EEOC v. Ventura Foods, LLC, No. 05-663 D. Minn. (2006), Ventura settled, agreeing to remove language from its standard severance agreement that required separated employees to agree not to file a discrimination charge in exchange for severance; re-offer severance benefits to former employees who had refused to sign the agreement; and notify employees who received benefits of their right to file a charge without losing benefits or violating the terms of their prior severance agreement.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/2132/severance-pay "