Q. Our company is about to have a layoff. Are we required to pay severance to the employees we lay off?
A. No. North Carolina law does not require severance payments to laid-off employees. However, this could be different if the company has a collective-bargaining agreement or an employee has an employment contract that provides for severance pay.
Although the law doesn’t require severance pay, employees are entitled to unused and accrued vacation benefits, unless such benefits are forfeited pursuant to a properly distributed company policy concerning forfeiture of vacation benefits.
If a company voluntarily elects to pay severance, it can require that employees sign a release for any potential employment claims against the company. The severance pay will also defer when employees may begin receiving unemployment benefits by the length of time the severance compares to regular wages.