A severance package is a company’s offer to an employee giving them a certain amount of money and other benefits upon termination. In exchange, the employee usually agrees to several requirements that may include a non-compete clause or a release of any right to sue the company. But when it comes to these agreements in Pennsylvania, what’s normal?
Typical Severance Pay in Pennsylvania
If you’ve lost your job or are fearing an upcoming round of layoffs, you may be wondering how much is the typical severance pay in Pennsylvania. There is no standard number — in fact, there is no law specifying that an employer must provide a severance package at all. The company’s offer can be as little or as much as it wishes.
A commonly cited benchmark is the number of years at the company multiplied by one week of pay. For example, if an employee has been with the company for 5 years and earns $1,000 per week, the company may offer $5,000 in severance pay.
Keep in mind, there is no legal fair standard at a state or federal level. In the above scenario, the company could offer only $500 or it could generously offer $20,000. The only law Pennsylvania has regarding severance pay is how it impacts your unemployment benefits. It’s recommended that you speak with an attorney to understand the exact implications of your financial situation.
Why Does an Employer Offer a Severance?
Given that it’s not required, many people wonder why companies offer severance at all. Some common reasons include:
- A goodwill gesture
- Positive press and public relations
- Staying competitive in the industry
Maybe a company offers a promise of severance in an initial hire offer to attract top talent, or perhaps the company’s leadership sincerely wants to help employees in a layoff.
Most of the time, however, the company is acting in its own best interest. Pennsylvania is an “at-will” employment state. This means employers may terminate employees without cause as long as the termination wasn’t due to something unlawful like discrimination. Still, there are often lawsuits and litigation after the termination of employees which can be very costly for a company. Employers want to avoid this and will take this into account when determining the amount of pay you’ll receive in your severance.
What’s Included in a Pennsylvania Severance Agreement?
Since there is no legal standard determining how much severance pay in Pennsylvania should be, employers will typically offer a minimum amount they believe an employee will agree upon. Typically, a severance package may include any or all of the following:
- A lump sum payment
- A payment determined by a percentage in comparison with how many years you were at the company
- An extension of your health insurance benefits for a determined amount of time
- A letter of recommendation to a future employer
- The payout of any bonuses or dividends owed to you
The unfortunate truth is that your severance package will most likely include as little as the employer believes is necessary to get you to sign. If you do accept severance pay, it will reduce the amount you’re eligible for in unemployment — so it may not be as good of a deal as it seems to take a lump sum payout. This is why it is critical to work with our Pennsylvania lawyers to assist you with negotiating your severance package.
Examples of Real Severance Packages in Pennsylvania
In October 2022, autonomous vehicle startup Argo AI closed for good. Employees received severance offers that included continued insurance, bonuses, and — in some cases — assistance transferring to similar roles at Ford or Volkswagen. Many employees described the severance as generous.
Another Pennsylvania company, Armstrong Flooring, filed for bankruptcy in May 2022. This event was certainly uglier than Argo AI, and there were nearly 3,000 claims from employees and executives seeking outstanding debts. While how much severance pay a company can offer may be limited by its own finances, usually companies want to avoid public legal battles. Issuing a check to employees can help company founders avoid litigation.
Negotiating Severance Pay in Pennsylvania
If you’re finding yourself at the mercy of a layoff or termination, you want to make sure you’re protected and aren’t fighting for what you deserve on your own. Hiring a PA severance lawyer will help you determine how much you should receive, what’s reasonable, and discuss any impacts to your unemployment.
The severance package offered to you is the starting point and typically the lowest offer the employer is willing to give. It is always in your best interest to negotiate your severance and make sure it’s fair and helpful for you as you move on to another position elsewhere.
An attorney will evaluate your employment, salary, contract, and severance offer. You may decide to ask for some or all of the following:
- A larger payment based upon your contract or length of time you were with the company
- Bonus payouts if they were contractually agreed upon and not paid to you yet
- Health insurance continuation or health insurance for longer than they’re currently offering
- Payment for unused vacation or sick days
- Stock dividends or options owed to you
- A letter of recommendation from your supervisor
- Compensation for lost company perks (cell phone or car payments covered by the company, for instance)
It is in your best interest to work with an experienced severance attorney. This lets your company know you’re legally represented and they can’t take advantage of you.
Does Negotiating Severance Really Work?
This is the biggest question on most employees’ minds once they start this process in Pennsylvania. Even if they think the severance pay should be higher, how much can they ask for before employers rescind the offer? In other words, won’t employers just say no?
Not necessarily — companies are more willing to negotiate than most employees realize. Here’s why.
1. You are entitled to a consideration period.
The consideration period is how long an employee can take to review an offer of severance. For employees under the age of 40, there isn’t a law or rule by which an employer must abide with regard to the severance agreement due date. You must be given a reasonable amount of time, but this can be negotiated as well.
If you are over the age of 40, the Age Discrimination in Employment Act (ADEA) states you must have at least 21 days to review and sign your severance agreement. Plus, you must be given a 7-day grace period afterward to revoke your signature should you choose to do so.
All that’s to say that it’s not unusual for an employee to want time to look at an agreement and come back with questions. You are legally protected as you take your time to consider the offer.
2. Remember, employers want something—your signature.
Even though severance may seem like an employer’s goodwill gesture to help you out in unemployment, Pennsylvania companies are hoping to avoid costly litigation.
Especially if you ask for something that could reasonably be interpreted as something the company owes you — such as agreed-upon bonuses that were never paid or unused sick days — most companies would rather give it to you now than be forced to pay after a legal battle.
If the employer wants you to sign a non-disclosure or non-compete, they may see a slightly larger severance payment as a fair exchange. As long as you make a reasonable request, many employers are willing to consider it.
Our Skilled Pennsylvania Severance Lawyers
If you receive an offer of severance, don’t wait in reaching out to an experienced severance lawyer. Our network of attorneys can speak to how much severance pay in Pennsylvania typically is and help you formulate a plan for negotiation. We work in all 50 states, especially Pennsylvania, New Jersey, New York, and Connecticut.
Once you reach out to our team, you’ll receive a response within 24 hours so we can get started reviewing your documents immediately. We offer flat-rate reviews and the option to negotiate on your behalf. Or, you can take our recommendations to negotiate with your employer directly.
If you’re in need of assistance with your severance package, please contact us for a consultation.