Severance Pay
Am I Entitled to Severance Pay?
You might be surprised to learn that there are no U.S. Federal laws that directly regulate severance pay. In fact, U.S. employers don't have to offer it at all. This might seem confusing, because some offer it anyway. But they do so to be fair, stay competitive or as a "bribe" to avoid lawsuits. Such offerings are benefits, and employers have the right to withdraw or modify benefits at anytime, except for those mandated by law or contract.
While the Fair Labor Standards Act (FLSA) does regulate minimum wages and overtime pay, it does not require employers to offer severance pay. The FLSA is enforced by the U.S. Department of Labor.
For massive layoffs exceeding a certain number of employees, some states and the Feds require companies to notify affected employees in advance. So, your employer might send you packing on the day you get your pink slip, but still send you regular paychecks and offer the benefits to which you're entitled, throughout your notification period (e.g., 60 days). Although it's better than just a boot on your backside, it's not really severance pay. It's "regular" pay in compliance with the law.
An unscrupulous company might call it severance pay anyway, to make you think they're doing you a favor. But sending you home with pay is a convenience for the company, to avoid last-minute retaliation such as theft and sabotage. "Real" severance pay is extra money in addition to any regular pay the company owes you, as meager compensation for losing your job. A severance package might include this extra money, along with extended benefits.
If you have an employment contract that says you are entitled to severance pay, then your employer is obligated to pay you, if you have complied with the terms of your contract. In the absence of explicit contracts, some states consider policy manuals, employee handbooks and personnel manuals to be implied contracts. So, if one of those documents includes a promise of severance pay, then your employer might be bound to it; that is, if you didn't sign an agreement, in which you acknowledged that such documents do not constitute a contract. If your employer has a long history of issuing severance pay, then some states might consider that as an implied contract. States might also consider a verbal promise of severance pay as an implied contract.
According to the U.S. Department of Labor, the Pension and Welfare Benefits Administration might be able to assist you, if you didn't receive severance pay required by an employment contract.
If you think you're getting a raw deal, you might be able to negotiate a better deal. For example, if your employer is trying to force you to quit to avoid the potential legal complications in firing you, then you've got leverage to bargain for severance pay or a better, overall package. (Get it in writing.) If your employer is laying you off, they might be concerned about what the remaining employees will think, so they might be willing to compromise. But, don't expect them to come to you. If you just lay down and take it, they have little incentive to make a better offer.
On the other hand, don't push your luck too much. If you do try to bargain, you are effectively declining the first severance pay offer and making a counteroffer. If employers don't wish to negotiate, most will likely honor their first offer anyway. But do be aware that they don't have to, unless contracts state otherwise.
Unfortunately as I am sure we will find out, GC is but a mile stone not the goal. So life goes on! Just because you have GC does not mean you have a job, does not mean your mortgage won't need to be paid, etc. etc. While you don't live in perpetual fear that you will be chucked out of the country, you still need to make money to live. Hence the doubt that you would be a new man, happy, or light! Free definitely! 