Terminations and the Law — Severance

Devora L. Lindeman, Esq., Partner at Greenwald Doherty LLP, is providing us with insight and information regarding the hiring process. Ms. Lindeman is a management-side employment lawyer and has exclusively represented managers and companies in federal and state agencies and courts with regard to their labor and employment needs for many years.

Questions addressed to Ms. Lindeman may be addressed in this column.

Hiring and the Law
By Devora L. Lindeman, Esq.*

Question: I’m letting an employee go on Friday. Do I need to give her two weeks of severance?

Answer: As I’ve said in a number of my columns—that depends. The answer depends on a number of factors including whether you have a contractual obligation to the employee to pay severance, if you have a policy or severance plan guaranteeing severance pay to your employees, or if you have a practice of paying severance pay to similarly situated employees that you let go in the past. It also depends on certain legal considerations that I will discuss below.

Even though “everyone knows” that you are supposed to get two weeks’ notice or two weeks’ severance pay when you are let go from a job, this is not actually the case in the U.S. There is actually nothing under U.S. law that requires an employer to provide severance pay to an employee who has been discharged unless that employer has created the obligation him or herself. The “two weeks’ notice/two week’s pay” guarantee comes from union collective bargaining agreements. Most unions have negotiated that guarantee. But unless you have a unionized workforce with such a provision in an agreement, or have otherwise guaranteed severance through a policy, plan or practice, nothing requires that you give an employee you are letting go any additional compensation as severance.

That said, there may be legal considerations that weigh in to the determination as to whether to provide severance pay or not. These are issues that you should likely discuss with an employment attorney but such situations arise when either (a) you are letting an employee go who has already raised an informal legal claim against your company or (b) you are letting an employee go under circumstances that may tend to appear to be discriminatory, even when they are not.

In the first instance, you may have an employee who is performing poorly and who is being performance managed to try to get her to improve. When she sees the handwriting on the wall that she is about to be let go, she may claim that she was being sexually harassed in an effort to divert attention off her, or to try to protect her job. Of course, you need to take the complaint seriously, investigate it, and take whatever action you deem appropriate to stop any harassment you confirm. However—if you let that employee go after such an investigation it could appear that you were firing her in retaliation for making a sexual harassment complaint. In such an instance, and to avoid a retaliation claim, it may be prudent to offer some amount of severance in exchange for the employee signing a severance agreement waiving all legal claims against the company. That way, the business can have closure on the situation.

Similar situations arise when a company is looking to terminate an employee who just advised that she is pregnant, or he has cancer, or who has become too elderly to perform at the necessary speed. Providing severance pay (along with a severance agreement drafted by an attorney) can be a way to ease an employee’s transition out of the workplace, and avoid a discrimination lawsuit that can be costly and time consuming.

Thus, the answer to your question most likely is “probably not.” But this is a situation where a call to your local employment counsel to discuss the facts of this particular situation may be prudent to prevent other legal headaches down the road.


*Ms. Lindeman is a Partner at Greenwald Doherty LLP, a law firm that exclusively represents businesses in all aspects of labor and employment law.  These columns are intended to be general information regarding the topic discussed and are not to be considered legal advice regarding a specific situation. Contact a management-side employment attorney familiar with the law of your jurisdiction for specific advice.  Ms. Lindeman is admitted to practice law in NY and NJ and may be contacted at DL@greenwaldllp.com.  She is under no obligation to respond to reader inquiries personally, but may answer general employment law questions through this column.

© 2011 Greenwald Doherty.  May not be reprinted without permission.



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Terminations and the Law —
Payout of Vacation Days on Termination of Employment

Devora L. Lindeman, Esq., Partner at Greenwald Doherty LLP, is providing us with insight and information regarding the hiring process. Ms. Lindeman is a management-side employment lawyer and has exclusively represented managers and companies in federal and state agencies and courts with regard to their labor and employment needs for many years.

Questions addressed to Ms. Lindeman may be addressed in this column.

Hiring and the Law
By Devora L. Lindeman, Esq.*

Question: I just let an employee go for not meeting job expectations. She sent me a text message asking when I would be sending her payment for the vacation days she didn’t use. Do I have to pay her for those?

Answer: The response to that question is again (as I’ve noted in other columns) a very lawyerly “it depends.” In this case, the answer depends upon the state your company is located in, as well as what your vacation policy says. Don’t have a vacation policy? Then the response defaults to your state’s law.

Many states have little to no legal requirements when it comes to vacation pay – unless the state includes accrued vacation days in the definition of “wages” and also has a requirement as to when all wages must be paid to an employee whose employment has been terminated.

Many states require final payment to terminated employees to be made no later than the next regular pay date. Some states, however, like California and Massachusetts, require you to hand an employee their pay—the final pay check—in the termination meeting—and specify that “final pay” includes accrued but unused vacation days.

Other states, like New York, tell employers to follow their own policy with regard to the payout of vacation days to terminated employees. These states allow employers to have what are called “use it or lose it” policies: if the employee does not use his or her vacation days, they are forfeited and not paid out upon termination of employment. If, however, your vacation day policy does not specify that days are forfeited, and is silent on that issue, you may be required to pay them out. If you are in a state that permits “use it or lose it” policies, it is prudent to include language both forfeiting unused vacation days upon termination and indicating that unused days will not be paid out.

If employees believe that they are owed for unused vacation days, and your state’s laws or regulations require that vacation days be paid out, terminated employees can usually go to your state’s Department of Labor and file a wage payment claim against your company seeking the value of the unpaid vacation days. Companies can handle such wage claims in the DOL alone, without the assistance of an attorney—but government agencies usually will provide more assistance to the employee than they will to you.

If your state has no law requiring pay out of vacation days, but your policy clearly says they are paid out and then you do not pay them, the employee would need to bring a lawsuit against your company (probably in small claims court) seeking payment under the policy probably alleging a breach of contract (i.e. the company promised to pay out unused vacation days and broke its promise (violated the contract) with regard to this employee). How successful such a lawsuit would be depends on a number of factors, including the language in your vacation pay policy and whether the court will consider the policy to be an actual contract the court can enforce.

Thus, to answer your question you need to first look at your vacation pay policy. If you don’t have such a policy, look to your state’s wage laws. To find them, go to your state’s Department of Labor web site (or the website for the equivalent state agency that handles employee wage issues for your state; for example, in Oregon the agency is called BOLI – Bureau of Labor and Industries). Most such web sites have an “FAQ” (frequently asked questions) section specifically for employers and often you can find your answer there. You also probably can call that agency and ask the question without giving any identifying information about yourself or your company—but that is not always the case. For certainty in terms of what to do (and how to fix your policy if needed for the future), consult with a management-side employment lawyer familiar with the law in the state where your company is located.


*Ms. Lindeman is a Partner at Greenwald Doherty LLP, a law firm that exclusively represents businesses in all aspects of labor and employment law.  These columns are intended to be general information regarding the topic discussed and are not to be considered legal advice regarding a specific situation. Contact a management-side employment attorney familiar with the law of your jurisdiction for specific advice.  Ms. Lindeman is admitted to practice law in NY and NJ and may be contacted at DL@greenwaldllp.com.  She is under no obligation to respond to reader inquiries personally, but may answer general employment law questions through this column.

© 2011 Greenwald Doherty.  May not be reprinted without permission.



To see how our employee test can help you bring better people on board watch this three minute video.



If you have ever interviewed someone and later discovered a "different" person is working for you, check out our new book How To Hire The Right People.


Hiring and the Law —
Terminations and the Law

Devora L. Lindeman, Esq., Partner at Greenwald Doherty LLP, is providing us with insight and information regarding the hiring process. Ms. Lindeman is a management-side employment lawyer and has exclusively represented managers and companies in federal and state agencies and courts with regard to their labor and employment needs for many years.

Questions addressed to Ms. Lindeman may be addressed in this column.

Hiring and the Law
By Devora L. Lindeman, Esq.*

Question: How do you terminate an employee?

Answer: With great care and consideration.

This is not an action to take when you finally get so frustrated with an employee’s performance failures that you just have to let him or her go. A loud Donald Trump-like “your fired!” may feel satisfactory at the time—but can also set the company up for legal claims by the employee who was let go.

Preparing to let an employee go actually starts when an employee is hired. Most employee lawsuits arise when the employee didn’t see the termination coming—no one set the expectations or let the employee know when he or she was not meeting them. Therefore, the steps to take to attempt to avoid employee lawsuits stemming from terminations include the following:

  • Job descriptions that let employees know what is expected from their particular job.
  • An Employee Handbook that lets employees know what is expected of them as your employee in general.
  • Managers who give performance feedback as part of their day-to-day interactions with employees. A “good job on that report today!” or a “Tony—you really need to get here on time; we’re counting on you” can go a long way with employees. Don’t wait until an annual review to let an employee know how he or she is doing. Employees should always know where they stand with a company.
  • Annual performance reviews—which are accurate and honest and don’t identify everyone as satisfactory even when they are not. How can an employer support a defense to a wrongful termination lawsuit that an employee was just awful when the performance review says “satisfactory”?
  • Performance Management in the form of coaching/counseling, verbal warnings (which are then documented with written memos to file), written warnings, performance probations, suspensions (with and without pay), and other actions taken to be sure that employees are well aware that their performance, behavior, attitude, etc. on the job are far from acceptable and are not satisfactory.
  • Terminations only after the employee has been told what is expected, corrected when the standards were not achieved, given several chances to make the grade, and has failed to perform as expected.

With all of these in place, employees will be less likely to presume that the termination was because they were black, brown, pink or purple. They will know very well that their employment was terminated because they failed to deliver as required by their employer. In addition—with all of these factors in place, an employer just may be pleasantly surprised when an employee actually improves and the termination is avoided.


*Ms. Lindeman is a Partner at Greenwald Doherty LLP, a law firm that exclusively represents businesses in all aspects of labor and employment law.  These columns are intended to be general information regarding the topic discussed and are not to be considered legal advice regarding a specific situation. Contact a management-side employment attorney familiar with the law of your jurisdiction for specific advice.  Ms. Lindeman is admitted to practice law in NY and NJ and may be contacted at DL@greenwaldllp.com.  She is under no obligation to respond to reader inquiries personally, but may answer general employment law questions through this column.

© 2011 Greenwald Doherty.  May not be reprinted without permission.



To see how our employee test can help you bring better people on board watch this three minute video.



If you have ever interviewed someone and later discovered a "different" person is working for you, check out our new book How To Hire The Right People.


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