Severance Pay Not Required By Law In NY

Both the New York State’s laws and New York City’s Laws do not require an employer to provide severance pay to an employee who has been terminated.  A company is only required to provide severance pay if there was a prior contract or promise to provide severance pay when the employment relationship ends.  Your former employer may offer you severance, but it is not required to do so.  They will want you to sign the severance agreement so that you waive any potential claims that you may have against the company.  They will also offer this in order to help with the transition of losing your job.

In a world where economic conditions fluctuate and layoffs are prevalent, the idea that severance pay is not required by law in New York is a scary realization to many individuals.  Even scarier is the fact that many New Yorkers go to work each day erroneously believing that they are automatically entitled to severance pay and do not become aware of the reality of New York severance laws until it is too late.

The good news in all of this is that many employers do, in fact, provide severance pay.  In cases where the employer does not voluntarily offer severance pay, employers should be careful regarding their actions and statements, as an agreement by the employer to pay severance can be unintended or inadvertent.  By this, we mean that an oral commitment is made on part of the employer to the employee or there is a regular practice of paying severance to various individuals in the company and so on and so forth.  Statements and actions such as these can lead to an obligation by the employer to provide severance pay and employees have every right to call their employees on oral commitments or favoritism.

In fact, the labor laws in New York State make it a misdemeanor when employers who do not pay severance to their employees when they have made a commitment to do so.  In fact, if the employer is able to prove that the employer wrongfully and willfully refused to pay severance, the employer will most likely be required to pay attorney fees and liquidated damages in addition to the actual severance pay.

Please contact us if you would like to discuss your severance agreement.