Some employers may think that the severance pay laws require them to offer severance packages to terminated employees in the form of some money and continuing benefits. However, in many situations, this is an incorrect assumption as the applicable severance pay laws do not often require employers to provide severance packages. Read on to learn more about when severance may is required and what may be included in a severance package. Generally speaking, there are only two situations when an employer is legally required to offer severance pay. First, some states have laws that require employers to offer terminated employees severance pay when their terminations are due to a facility closing or the company is laying off a large number of employees. In these situations (and depending on the state’s laws), employers may be required to give a small amount of severance pay. To find out more about the laws in your state, you should contact the Utah Department of Labor or call our office for more information. There are many employers that often give severance packages to long-term employees that have been with the company for a substantial period of time, even without a legal requirement to do so. In addition to some employers feeling that this is the right thing to do to reward the employee’s loyalty and hard work, it often softens the blow that can come with termination and can discourage a former employee from pursuing a lawsuit against the company. Remember that the happier you can keep employees that have been terminated, the less likely that those former employees will decide to sue your company. Instead, you can also institute a policy that makes the amount of severance pay dependent upon the length of employment. By doing so, you can honor your longtime faithful employees without having to give big payoffs to employees who leave the company after a short employment. Second is insurance. Employee’s heath, life and disability insurance for a period of time. Keep in mind that there is a federal law called COBRA (the Consolidated Omnibus Budget Reconciliation Act) that may require your company (if you provide group health insurance to your employees) to offer terminated employees the opportunity to continue their insurance coverage. However, COBRA does not require the employer to pay the bills. In addition, many states also have laws that deal with the continuation of health care, and a few of these state laws also require employers to pay for the health care for a short period of time. To find out about the laws in your state, you should contact your state’s insurance department. Perhaps a letter of recommendation would make sense. This can be a small but powerful option for you to offer in your severance packages. By agreeing to write letters of recommendation, you have the opportunity to really insulate your company against potential lawsuits. However, providing references and letters of recommendation can have their own risks. When you can, it is always best to sit down with an employee that is going to be terminated and hash out just what it is that he or she is really looking for in a severance package. You may be surprise to find out how little some employees really want. Some things to consider in these conversations are letting the employee keep equipment (cell phones, laptops, printers), getting employees released from non-compete agreements or providing ongoing gym memberships. Severance Pay Lawyer Free ConsultationWhen you need a lawyer regarding severance pay, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.
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8833 S. Redwood Road, Suite C West Jordan, Utah 84088 United States Telephone: (801) 676-5506
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