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Benefits and Compensation

[03/09] Senate to take up unemployment insurance extension
[03/08] Allergan CEO got $11.1M in compensation in 2009
[03/08] Court will decide if NASA checks can continue
[03/04] Jobless claims drop, productivity revised higher
[03/04] No is no: More men file sexual harassment claims
[03/03] GM's Bob Lutz to retire
[03/03] Lone holdout gives in, Senate OKs jobless benefits
[03/02] Wal-Mart to pay $12M in Ky. discrimination suit
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Business

[03/09] Samsung, Panasonic start selling 3-D TVs
[03/09] Britain's trade deficit widens
[03/09] China passenger car sales up 55 percent in Feb
[03/09] Ford launches affordable made-for-India compact
[03/09] EADS makes loss but says visibility improving
[03/09] MGM Mirage to sell $845 million in bonds
[03/09] Publix Super Markets recalls some seasoning mixes
[03/09] Kroger 4Q profit down 27 percent
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Employment Practices

[03/09] Senate to take up unemployment insurance extension
[03/08] Allergan CEO got $11.1M in compensation in 2009
[03/08] Court will decide if NASA checks can continue
[03/04] Jobless claims drop, productivity revised higher
[03/04] No is no: More men file sexual harassment claims
[03/03] GM's Bob Lutz to retire
[03/03] Lone holdout gives in; Senate OKs jobless benefits
[03/03] Toyota to spend $250M on workers at Calif. plant
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Top Headlines

[03/09] TV producer admits attempting Letterman shakedown
[03/09] Ohio gunman recently learned he was being fired
[03/09] Pa. woman charged with recruiting jihadists online
[03/09] Legal fallout continues from Coyotes bankruptcy
[03/09] Texas judge rescinds anti-death penalty ruling
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Litigation

[03/09] Prius driver's 911 call: 'My car can't slow down'
[03/09] Feds to probe cause of runaway Prius in California
[03/08] Stay tuned: More fee disputes over local TV coming
[03/08] Tax season bringing out the fraud artists
[03/08] GE: Limit PCB contamination during Hudson dredging
[03/08] Court will hear case about vaccine side effects
[03/05] House panel wants more Toyota acceleration details
[03/05] Winans family member accused of Ponzi scheme
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SEVERANCE - WHAT ARE THE RULES

Posted by: John Gallagher
June 17, 2009
Topic: Employment Law

Neither state nor federal law requires an employer to pay Severance to an employee. Rather, any Severance obligations owed by the employer are created solely by the employer's own policies or practices, or by virtue of a contract with an employee.

A company policy for Severance is typically spelled out in the company Handbook, or sometimes in defined benefit plans setting forth retirement benefits and the like. A company practice requiring the payment of Severance is established where an employee can prove that the employer routinely pays Severance to departing employees.

An offer letter or Employment Agreement is the most common location of a written contract for the payment of severance to a specific employee. Moreover, oral promises to make pay Severance, if made in connection with the negotiation of employment or continuing employment, are enforceable as well if proper supporting evidence is presented. Further, if an employee signs a Release in exchange for Severance, the employer has a contractual duty to pay the promised Severance.

An employer that fails to pay Severance despite an obligation to do so may be sued for breach of contract under Pennsylvania's Wage Payment and Collection Law. This powerful, pro-employee statute provides significant remedies and penalties not just against the employer, but also against any individuals employed by the employer who participated in the decision to withhold the Severance payment.

Finally, employer's often offer a departing employee Severance even where there is no obligation to do so. In such cases, employers offer such Severance in order to obtain a Release from the employee prohibiting a future lawsuit. You should seek counsel if your employer offers you Severance upon the termination of your employment.

Severance payments do not count as wages for unemployment purposes, and therefore do not preclude or in any way inhibit an employee's right to Unemployment Compensation.