Can a company's offer of severance pay be withdrawn?
September 15, 2012 2:20 PM   Subscribe

Will my company stop paying me severance if they learn I've already found another job?

So, I got laid off on Friday. That's bad. However, I sensed this was coming, and wanted to get out anyway, and I already have a new job lined up. That's good! The issue-

As part of the layoff, I was given the promise of two week's severance, so I'll be receiving one last paycheck as usual on the 30th. I signed a statement to that effect as part of my termination agreement.

I've already got another job lined up, and (not to jinx it) I should have that confirmed and be signing a contract early next week. Once that's done, I'd like to negotiate with them and tell them my start date will be on the 30th. I've been upfront with them about the layoff.

Question is- for a variety of reasons, I'd like the people from my old job to know that I've already gotten this new one (once the contract's signed and it's set in stone.) It's also a small world, this industry, and they'll probably hear even if I don't tell them. Would this negate the severance? Meaning, can they legally/would they go back on it and not send me the check if they find out I already have a new job that I could start asap? I need the severance, partly because without it, I'd go a while without pay even if I started the minute I signed the new contract, which I really can't do- and because to be honest, I've worked straight through the past few years without time off and could really, really use a paid vacation before launching into something new.

This might seem like a silly question, given that they didn't say there were any conditions placed on paying the severance, but it's best to be safe. I know you are Not My Employment Lawyer, but best informed guesses would be welcomed :)
posted by anonymous to Work & Money (13 answers total) 2 users marked this as a favorite
It sounds like the offer of severance was verbal? If so, I guess there's no reason they would HAVE to pay you if they learned you had a job. But, that said, the severance offer was made it good faith, it would reflect poorly on the company to back down just because you had the ambition and skills to get a job quickly.
posted by HuronBob at 2:23 PM on September 15, 2012

They're paying you a severance because they're laying you off. Whether or not you have another job lined up is moot.
posted by carsonb at 2:24 PM on September 15, 2012 [11 favorites]

wait, you signed a statement...sorry, missed that. I can't imagine they could back down.
posted by HuronBob at 2:24 PM on September 15, 2012

I used to work in employee relations (read: the people who fire people, among other things). In my experience, your new position will absolutely not affect your severance. The document you signed is most likely a pretty standard separation agreement that has a clause for consideration (severance). It's a legal document.

In a lay-off situation, your old company is probably pretty happy you have a new job lined up. No one likes lay-offs.
posted by charmcityblues at 2:25 PM on September 15, 2012 [2 favorites]

Unless there's wording in the agreement you signed predicating the severance on you not having employment, you should get all the severance they promised.
posted by Thorzdad at 2:36 PM on September 15, 2012

It's not unemployment insurance or anything like that - the fact that you get another job is irrelevant to why they are paying you severance.

Typically severance is paid out in exchange for signing some paperwork saying you're not going to sue them about various things. Also in the equation is that disgruntled former employees may be able to do a fair amount of PR damage, so they're trying to buy back a bit of good will, instead of leaving you just feeling completely screwed over.
posted by aubilenon at 3:12 PM on September 15, 2012

I have been paid severance, but never had an employer who paid severance on condition that I not work.
posted by zippy at 3:18 PM on September 15, 2012

They shouldn't take it back, it would be incredibly scummy. However, I have never heard of any case ever where someone gets laid off but isn't paid until the "regular payday." The last paycheck and severance is always handed to you before you leave the building. Most companies use severance as a kind of bribe to get you to sign a paper saying you won't sue them.

So the way they're doing this is extremely unusual, but I wouldn't sweat it too much. However if it was me I wouldn't tell anyone about the new gig except trusted friends. Nothing good ever comes of that.
posted by drjimmy11 at 3:58 PM on September 15, 2012

Once you buy a prize it's yours to keep. Severance is guilt-money. You should immediately file for unemployment. Just in case.
posted by Ruthless Bunny at 4:19 PM on September 15, 2012 [2 favorites]

I have to agree about filing for unemployment. Until that contract is signed, you don't actually have a job. And severance, although not required by law so far as I know, is a good faith gesture. The only time I have seen restrictions on severance is if you find another job at the same company.
posted by Altomentis at 6:37 PM on September 15, 2012

> However, I have never heard of any case ever where someone gets laid off but isn't paid until the "regular payday." The last paycheck and severance is always handed to you before you leave the building. Most companies use severance as a kind of bribe to get you to sign a paper saying you won't sue them.

Not always. I know a number of people (including my SO) who had to wait until their next regular paycheck to get the last of their regular salary.

Secondly, under some circumstances and in some states it is recommended or even legally required that laid off employees be given a certain number of days to review the severance agreement before signing it, which would obviously preclude them from getting their severance payment on their way out of the building.
posted by desuetude at 8:49 PM on September 15, 2012

IANAL, and I'm definitely not YWL, but from what I understood, severance isn't unemployment.

It's more of "Here's some money because we feel that you should be properly compensated even though we had to let you go before we could properly compensate you. p.s. Please don't sue us." less so "We're tiding you over until you find some new employment via a combo of tax dollars and money from your previous employer."

Your question makes more sense from an unemployment standpoint rather than a severance issue. Hope this helps.
posted by Sphinx at 12:46 AM on September 16, 2012

Having another job shouldn't affect your severance at all (in my last job, which I was at for 8 months, I administrated 3 separate layoffs). The money is really in exchange for you promising not to sue them. I mean no one expects 2 weeks' pay to somehow save you or really even be able to tide you over til your next job.

Also, in every layoff we did everyone got their final paycheck on the day of and their severance was direct deposited on the next normal payday after the signed agreement is received and the revocation period had expired.
posted by magnetsphere at 10:39 AM on September 16, 2012

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