If I had said that, I would have been wrong.

May 13, 2008 9:19 PM

I was recently laid off and given only one week's severance. Several people have told me that this is not legal. Could they be right?

Some details:

New York City.
Part of company-wide layoffs affecting many people, although I was one of a few who were full-time with benefits.
I'd been working there just over a year.
I worked harder and stayed later than just about anyone else there, and everyone in the company would probably testify to that fact.
My whole position was eliminated. The CEO explicitly told me that the layoff was not related to my performance.
I am eligible for unemployment, and I have already filed for it.
The layoff happened about three weeks ago.

I realize that NY is an 'at-will' state, and companies can axe whomever they please...but my question is only about severance.

Is there any legal standard requiring them to give me more than one week's salary? Does it depend on anything? Do I have any redress? Is there any solid precedent for such redress?

posted by bingo to Work & Money (19 answers total)

I don't know about New York, but I'm in Illinois which is also an at-will state, and there's no severance necessary here. You only need to be paid for remaining vacation time that you've not used.

My guess is that New York wouldn't be different, since it is also an at-will state.
posted by twiggy at 9:25 PM on May 13, 2008

You only have a right to your accrued but unpaid salary (and reimbursements, etc.). There is no legal right to severance unless you have an employment agreement that provides for it. See here.
posted by Falconetti at 9:26 PM on May 13, 2008

As far as I know, employers are not required to give you severance at all, unless it's specifically written in a contract with your employer. I worked for a company for 5 years, was laid off, and received nothing.
posted by bradth27 at 9:27 PM on May 13, 2008

There is no legal right to severance unless you have an employment agreement that provides for it.

FYI, while this is true in NY, it does vary state by state. In Maine, under certain conditions, workers must be given one week's pay for each year of service they have with the company.
posted by anastasiav at 9:31 PM on May 13, 2008

Yes, my bad, anastaviav is absolutely right, my comment only applies to New York.
posted by Falconetti at 9:33 PM on May 13, 2008

My understanding, which comes from a book we're writing on the subject of terminations (a book that our HR manager vetted for us, although I don't know how closely she paid attention to that particular line) is that a company is not required to offer severance unless they've already offered severance to somebody else. What you do for one, you must do for others or risk a judgment of disparate treatment.

So, if you can find somebody else that got more than 1 week, you may be able to get more than 1 week yourself just by threatening to raise this as an issue.

Now, whether that's really true in fact or in practice is something that a lawyer would need to weigh in on. My lay assumption is that it may not be a specific legal requirement, but that absent equal treatment, you may get additional weight paid to any lawsuit you care to bring, so it's a rule of practicality and CYA rather than a law.
posted by willnot at 9:36 PM on May 13, 2008

Most likely that one week of severance is for your one year of employment.
posted by netbros at 9:44 PM on May 13, 2008

There are federal exceptions to the "employment at will, you're outta here" thing, and there may be NY state exceptions as well, but I'm not familiar with the law in your state.

The wikipedia entry on At-will employment summarizes the federal and state exceptions.

One notable federal exception is the Age discrimination in employment act. If you are at least 40, and your employer has at least 20 employees, then there are certain things your employer must do for you. I haven't found a good summary, but IIRC they may need to give you more notice or follow additional procedures when terminating you.
posted by zippy at 10:41 PM on May 13, 2008

One week of severance per year of service is not unusual (at least in Silicon Valley). Obviously wilnot's comment means that the company would have to use the same formula for everyone, not that they have to pay everyone the same. Also, (again in California) I've seen companies offer different formulas at different times (usually things get worse as the company goes through successive rounds of layoffs.)
posted by metahawk at 11:31 PM on May 13, 2008

Here is some information on the WARN Act. This, as far as I'm aware of, is one of the only laws that companies have to comply with when laying people off, and even with this there are some significant restrictions (e.g. must be laying off 100+ employees etc.).
posted by hazyspring at 4:31 AM on May 14, 2008

Like hazyspring, I think that the people who are telling you that it is illegal might be thinking of the WARN Act. This was responsible for a lot of people collecting severance during the dot-com bust within the last ten years when companies were shedding huge amounts of people like crazy.

In order to qualify under WARN, you and 99 other employees of your company who worked more than 20 hours per week and more than 6 months in the last 12 months must be laid off at the same time (or in a very close time period, I think.) If that is the case in your situation, you can contact the U.S. Department of Labor to get your questions answered.
posted by jeanmari at 8:08 AM on May 14, 2008

I should clarify, severance is not required under the WARN Act. But some companies chose to pay severance that equated to the 60 day required notification period under WARN. I need more coffee.
posted by jeanmari at 8:11 AM on May 14, 2008

You should know that depending on how long you've been there, 1 week may be a pretty crappy offer. A lot of times it also comes with signing an agreement saying you won't say anything bad about them. If you are on good terms with the company, then you may want to just sign and take the weeks pay but take that into consideration.

Also, I've heard that for employees who perform well and have been around a while, a "generous" severance would be around 1mo/year there. If you think there might be any opportunity for requesting more, you might want to consider it.
posted by Elminster24 at 8:19 AM on May 14, 2008

Response by poster: Hmm...well, unfortunately, there were not even 99 people in the entire company at the time of the layoffs. More like 50. So much for that angle. And there was no severance clause in my contract...nor was there any contract, for that matter.

One week for a year actually is pretty unusual in the advertising industry in New York. I got laid off from another job about a year and a half ago, and they gave me a month's severance, plus a second month's severance if I agreed to sign an agreement not to bad-mouth them. And the people I know who are shocked by this...they are all in the same industry.

But, of course, that doesn't mean that it *can't* be done.

Mrph.
posted by bingo at 8:23 AM on May 14, 2008

nthing everyone else, you may have a WARN Act claim. Any employment law attorney in your local area should be able to figure out pretty quickly whether or not you and your laid-off co-workers have a claim.
posted by bananafish at 9:10 AM on May 14, 2008

I doubt that you will find any statutory support for this "you can't give me less than you gave anyone else" angle. It's possible, but I've never heard of anything like this anywhere.
posted by iknowizbirfmark at 9:26 AM on May 14, 2008

bingo, I work for one of the largest advertising agencies in New York and have worked for others before this. One month for one year is almost unheard of (it's usually only a week or two weeks per year of service) and quite honestly, most employees don't even get severance offers here unless they've been with us for a few years.

Also, I think iknowizbirfmark is right about the equitable treatment deal...we regularly give executives severance packages while the "grunts" just get shown the door unless they're long term employees.
posted by JaredSeth at 10:41 AM on May 14, 2008

I used to do HR in New York.

You are only entitled to severance if it is so stated in your employment contract. There is no legal basis for contesting a severance amount based on how your company has treated other employees.

The WARN Act doesn't have anything to do with severance payments at all.

If they're giving you a week's severance without strings attached, then they're just being nice in their miserly way. If they do attach strings -- are you signing something that says you won't disparage them or waiving rights to bring suit against them? -- then you may be in a position to bargain for more severance. They, of course, are in a position to say no -- and even to withdraw their initial offer altogether.

Sorry -- that's just the way it is.
posted by gum at 11:04 AM on May 14, 2008

Response by poster: Just to clarify: The one week of severance was not an 'offer.' They just gave it to me.
They told me I was getting it, and a few days later, I had it by direct deposit. When I got hired, severance was not discussed.

When I got the axe, they didn't ask me to sign anything, which was a bit weird, since I actually had a lot of contact with vendors and clients...more combined than anyone else at the agency, in fact. But then, this lack of thinking things through in a holistic way on their part, and lack of appreciating the significance of my role, is not really surprising in light of the overall situation.

I guess I'll take my ball and go home now.

Sorry...ball was property of the company. I'll just go home.
posted by bingo at 1:07 PM on May 14, 2008