Some of the most common questions employees ask employment lawyers relate to severance pay. Below, we have answered a few of the most frequently asked questions about severance agreements under New York and New Jersey law.
Q: I have been laid off or fired by my company. Am I entitled to severance?
A: Generally, in New York and New Jersey there is generally no legal requirement for a company to pay severance to its employees. However, if your company has a severance policy or plan, then it has to pay you severance if you meet the relevant eligibility requirements. Likewise, if you have an individual employment contract, then your employer is required to pay you any severance you are entitled to under your contract.
Further, under New Jersey’s WARN Act, in some mass layoffs you can be entitled to severance pay. For more information, please see our article: New Severance Entitlement to New Jersey Employees Subject to Mass Layoffs.
Even if you are not legally entitled to receive severance, companies often offer severance to employees who they fire without cause. This is particularly common during mass layoffs and reductions in force.
Q: How much severance pay am I entitled to receive?
A: Other than pursuant to New Jersey’s WARN Act, the amount of severance you are entitled to receive depends on what the relevant severance policy, severance offer, or employment contract says. It is often based on how long you worked for the company, such as one or two weeks’ of severance per year. But it also can be based on another formula set by the company, a fixed amount, or determined on a case-by-case basis.
Q: Can I negotiate for more severance pay with my company?
A: It is often possible to negotiate a better severance package. For example, if you have a legal claim against your employer, you or your employment lawyer might be able to negotiate additional severance. Similarly, some companies will agree to pay additional severance for a variety of reasons, such as because you worked for the company for a long time, or because the circumstances leading up to your separation were particularly unfair.
Q: What do I have to give up before I can receive severance pay?
A: What you will have to give up before you can receive severance pay depends on what your company’s policy says and/or what your severance agreement says. At some companies you do not have to give up anything to receive severance pay as long as you meet the eligibility requirements. More typically, you might have to waive any legal claims you have against your company, such as claims for wrongful termination, discrimination, harassment, and retaliation.
It also is common for severance agreements to include non-disparagement provisions, meaning an agreement not to say anything negative about the company. In addition, you might have to agree to enter into a non-compete agreement, meaning an agreement not to work for a competitor for a period of time, or a non-solicitation clause, meaning an agreement not to do business with the company’s customers, clients and/or employees. Of course, whether it is worth agreeing to these types of provisions depends on a number of factors including how much severance you have been offered.
Q: What should I do if I need help understanding or negotiating my severance agreement?
A: If you need a lawyer to review your severance agreement for any problems, to explain certain provisions to you, or to try to negotiate a better severance offer, then it is highly recommended that you find an attorney who specializes in employment law. If your severance agreement is governed by New York or New Jersey law, then we welcome you to contact Rabner Baumgart Ben-Asher & Nirenberg to schedule a consultation to discuss your severance agreement.
For more information, please see our previous article: What to Consider Before Accepting a Severance Agreement.