Frequently Asked Questions
- Severance Package Details
- Reviewing and Negotiating Your Severance Package
- Other Questions that Impact Your Severance
Severance Package Details
What is a severance package?
A severance agreement is a legal contract. The company is typically offering the terminated employee a certain amount of post-termination pay instead of the employee suing them.
Severance packages can include other benefits or obligations like non-compete clauses, extended medical benefits, or future time with your former employer for litigation situations.
Am I entitled to severance pay?
No, most companies provide a severance agreement when they lay off or fire an employee. Offering a severance package is entirely optional for the company. Most companies only do it to protect themselves from future lawsuits, the employee going to a competitor company, or adverse claims from the employee. The company takes multiple factors into account when preparing the packages.
How is severance pay calculated?
Several factors go into severance pay amounts. Employees in higher management positions may receive additional benefits like longer pay terms, office equipment, or medical benefits.
Typical payouts can last up to 26 weeks and go by the following calculations:
- Hourly Employees: Number of years with company X 1 week of regular pay = Severance Pay $ Total
- Salaried Employees: Number of years with company X 2 weeks of regular pay = Severance Pay $ Total
How long do I have to sign the severance documents?
When companies terminate employees and provide a severance package, the goal of the severance is to benefit both the company and the employee. Therefore, the employee has time to review the agreement. Review timelines depend on employee age and the number of people terminated simultaneously.
- Employees under the age of 40 – No set time frame, but it must be reasonable and ample enough to review and understand the components.
- Employees over the age of 40 – 21 days to review and sign and 7 days to reconsider and revoke your signature.
- Multiple terminations at once – 45 days to review and sign and 7 days to reconsider and revoke your signature.
Reviewing and Negotiating Your Severance Package
Why should I get my severance agreement reviewed before signing it?
Some fired or laid-off employees receive severance agreements. Most of the time, the severance includes payment for the employee while protecting the company from future problems. The initial document focuses on the company’s benefits, not you. Having a review of your severance package ensures the protection of your employment rights and addresses all your potential benefits.
What can negotiating get me?
After reviewing your severance package, your attorney may recommend negotiating additional benefits into your agreement. You can negotiate yourself, or Severance Lawyers can step in and negotiate on your behalf.
Once the company gives a final severance offer, you have 21 days to sign the agreement.
How do I start the process of getting my severance package reviewed and negotiated?
Severance Lawyers has a four-step review process. You can get started by filling out our online request form or contacting our office at (800) 399-5851.
How long does it take to review my severance documents?
Severance Lawyers will get in touch with you within 24 hours of your request. This call will be your initial consultation. After deciding if you would like to move forward with our attorneys, we will set up a time that fits your schedule to do a deep dive of your document, options, and negotiating plan.
How much does it cost to have my severance reviewed?
Severance Lawyers charge a flat-rate fee for all severance reviews. During your initial call, you will receive the flat-rate fee for your specific document review and negotiation.
Other Questions that Impact Your Severance
Do I pay taxes on severance pay?
There was a lot of debate around how people should pay taxes for their severance packages. In 2014, the Supreme Court ruled in favor of the IRS that severance payments fall under the FICA payroll tax bracket.
You will pay regular payroll taxes on your severance pay. You will also pay state income taxes as necessary on the wages.
Can the company take the severance pay outs back?
Yes, in some situations where the company rehires you within a specific time frame, the company could require payback.
Can a non-compete clause keep me from working?
A non-compete can keep you from working under certain conditions. It can keep you from working with a direct competitor or starting your own competing business. A non-compete has the potential to hinder your future business ventures. If you sign a non-compete and break its guidelines, your former company can sue you.
Do you have any additional questions? Get in touch with our team of severance lawyers today to learn more and get started with your severance review.