Employer Severance Agreements
Given the risk of lawsuits when legally protected employees need to be terminated, many businesses offer severance packages. Usually, employers have no default obligation to pay employees when they are laid off or fired. Sometimes, however, it makes legal and financial sense to pay a significant amount to a departing employee as part of a severance agreement.
Potential employee claims
Employers primarily offer severance agreements to their employees so in exchange for the promise that these employees release any claims they may have against the business. Several federal and state laws protect employees, and when employers violate those protections, employees may file claims with the Equal Employment Opportunity Commission (EEOC), the Pennsylvania Human Relations Commission (PHRC), or with state or federal courts. The most common potential claims include:
- FLSA wage violations
- FMLA medical leave violations
- Sexual harassment
- Age, disability, race, and sex discrimination
- Under federal law, these claims are filed with the EEOC
- Under Pennsylvania state law, these claims are filed with the PHRC
In addition to these very common claims, employers need to be aware of a large number of other possible claims. Make sure that you have an experienced business attorney advise you regarding these potential pitfalls, especially before you take action against any employees who may be protected.
Benefits of severance packages
The ideal severance package will result in substantial benefits for both the employer and the employee. When representing an employer, we seek to obtain the following terms in our severance agreements:
- Release of claims – employees receiving severance must release any and all legal claims they might have against the business
- Transition period – employees sometimes agree to assist with a transition in order to receive severance funds
- Non-competition – employees may be required to agree not to solicit customers from the business or compete directly with it
We work to customize each severance package for the individual client’s situation. We help evaluate the possible claims that an employee might bring and the risk of exposure to liability the company may face so that managers can make informed decisions about offering severance.
Kraemer, Manes & Associates LLC “KM&A” is a law firm serving all of Pennsylvania with our principal offices in Pittsburgh and Philadelphia. Call KM&A in western Pennsylvania at 412-626-5626 or in eastern Pennsylvania at 610-616-5686. KM&A can be reached by email at firstname.lastname@example.org.