Know Your Legal Rights Upon Termination
5 examples of employer BS with severance agreements
Knowledge is power, and it’s important to know your legal rights if you are being terminated. While employment laws differ by state, many states do have similar rules to California. Below are a few examples of what I have seen employers try to pull.
Not paying your last paycheck on time, or missing payments. Most states have specific rules about when employees must be paid out when terminated or even if they quit. In California, if you are terminated, your employer must pay you in FULL on your last day. Even if you quit, you must be paid within 72 hours of your last day. They are not allowed to wait until the regular pay period. Full payment means not just your regular pay, but all PTO you are owed. Significant penalties accrue when not following this law. In addition, if you come to work and are terminated that day, your employer owes you for that last day. Make sure your paycheck accurately reflects ALL that you are owed.
Trying to get you to sign a severance agreement on the spot. Do not EVER do this! It’s a scare tactic designed to pressure you into signing before you are ready. Again, state laws vary, but in California, if you are under age 40, you have 5 days to sign and 21 days if you are age 40 or over. (Don’t ask me why the age difference; just another dumb legislative compromise.) This time period meant for you, not for your employer. Many people mistakenly believe employers will “revoke” the severance offer after the 5-day or 21-day period. While the employer can pull it at any time, they very rarely do because they want you to sign your rights away to sue them. It’s important to remember that you have leverage when they want your signature. You can *always* ask for more time after the 5-day period. The law also requires your employer advise you to consult an attorney, which of course you should.
Denying you an earned bonus. With so many layoffs happening right now, denying employees bonuses is a common tactic. California law regarding bonuses upon final payout is a bit tricky, but essentially if you earned the bonus and it’s part of your expected pay, you are owed that money when you leave. Your employer may try to claim the bonus is “discretionary” but this is why you should consult an attorney to help determine if you are legally owned this money.
Not offering healthcare benefits. In our very messed up economic system, our healthcare coverage is often tied to employment. While the law does require that employers offer COBRA “benefits”, this just means you are able to maintain your current coverage as long as you keep paying for it, which can be very expensive. You can always ask for additional months of healthcare coverage, either on your current plan or another that you choose.
Dragging out your severance payments. For some reason, employers often like to break up your severance payout over several installments, tied to your previous paycheck schedule. This is silly and unnecessary. I usually ask for a lump sum or one or two payments. It often helps to check with your financial advisor as well for potential tax implication on how you get paid.
Don’t let your employer mess with you. Always consult an employment lawyer before signing any severance agreement. Check out my legal services.