Severance Ethics

July 20, 2005 12:54 PM

Do I really have to tell my old employer that I have a new job if they are still paying me severance?

I got a package that allows me up to 13 weeks of severance pay, but I just landed a new job on week 4 of my sojourn in the land of the unemployed. I'd love to keep getting the severance package, which I would have prefered as a lump sum anyway, while starting my new job. Can I do it?

posted by Cassford to law & government (6 comments total)

What does the severance agreement say? If your former employer is paying for health insurance (COBRA) for you for some months after your separation date, it's quite possible that the agreement says that the employer will stop paying once you have a new job with insurance. (In which case, yes, you have to notify your old employer.) But it's much less common for the severance pay to be conditional on remaining unemployed.

Or, perhaps to answer the question differently: if the severance agreement says that you will not continue to be paid if you get an new job, and you do get a new job (as you have), and you fail to notify the employer (as you're considering), then you have committed fraud. You've taken money that you're not entitled to.
posted by WestCoaster at 1:04 PM on July 20, 2005

What WestCoaster said: you need to read your termination paperwork. Generally speaking, severance pay is an agreement to pay you a certain amount at termination regardless of your future employment situation; it's not usually like unemployment. The only time I was in this situation I received the pay in a lump sum and not contingent upon anything, and I was temping the next week, so there was overlap. However, the way you put it is "up to 13 weeks" which makes it sound like it's dependant upon something. If you have a severance agreement, it will specify the terms, and if the terms are that your severance ends when you start a new job, then you can't legally (or morally, in my opinion) take any money from your former employer once you start getting paid by your new employer. But really, we can't answer this question without knowing what your agreement with your former employer is.

If I were you I'd be thankful to have found a new job so quickly, and to have been paid to do it. Some of us have been searching for months and are faced with continuing that search without the benefit of a generous severance package. ;)
posted by jennaratrix at 1:32 PM on July 20, 2005

Depending on where you are and how long you worked for your employer, they may have been required by law to give you severance pay. If that were true in your case, you would want to check the regulations (I can't imagine that it matters if you get a new job), in addition to any agreement you signed with your employer.
posted by duck at 1:56 PM on July 20, 2005

Be prepared for the standard litany of "You're stealing from your job!" folks, but I'd say "It depends." It depends on your severance agreement, how likely you think you are to be caught, and how much you like your former employer. Read your severance agreement. Think about your new job: if it's in the same pay range and industry, you're on shakier ground than if you've gone from CEO to pumping gas. And think about whether or not your former employer screwed you. The more they screwed you, the less loyalty you owe them.
(Oh, and keep in mind that, yes, depending on your severance agreement, they can demand the money back or charge you for fraud. Knowing the risks sometimes makes decisions easier).
posted by klangklangston at 3:27 PM on July 20, 2005

I don't see why having another job would be a consideration. Severance pay, as far as I've always understood it, is pay given by a company to an employee who has been made redundant or otherwise given the boot as a form of "good bye" and courtesy (whether legally required or not). Where does and why could this fit in with being some sort of "job seeking fund" or welfare payment?
posted by wackybrit at 5:34 PM on July 20, 2005

This was a hypothetical. I was about to sign a severance agreement and saw a "clawback" provision and wondered if it was standard and what the implications were. The answers here helped give me the gumption (along with a lawyer friend's advice) to force the company to strike the clause before I signed. And they did. My last day is in a couple of weeks. Thanks a bunch!
posted by Cassford at 11:44 AM on July 27, 2005