When faced with a layoff or termination, one of the most frequently asked questions is whether an employee is eligible for severance. Under Florida law, employers are not obligated to provide severance pay to their employees. If you have questions about severance, a qualified employment attorney can help advise you of your rights.
Distinguishing earned wages from severance pay
It's essential to understand the difference between earned wages and severance pay. Earned wages refer to the amount an employee has earned for work performed. Regardless of whether an employee resigns or is terminated, their employer must compensate them for all earned wages. The employee is entitled to receive a final paycheck, including earned commissions and guaranteed bonuses, on the next scheduled payday following the end of their employment.
On the other hand, severance pay is a voluntary benefit offered by an employer or as per company policy. Typically, the amount of severance pay is determined based on the length of the employee's service. It's a best practice for employers to establish the terms of any severance payment through a severance agreement.
Rights to severance pay in Florida
Florida law does not grant employees an automatic right to severance pay. If you're uncertain about your entitlement to severance, the first place to check is your employment agreement or union agreement as well as under any applicable company policies. If such an agreement or policy specifies that you are entitled to severance in the event of termination, it's crucial to review the terms carefully, as eligibility may vary depending on the reason for termination. For example, severance pay is often unavailable in cases of termination for cause such as a termination for wrongdoing by the employee.
Severance pay may also be required under company policy. Businesses may offer severance pay in situations involving a large number of layoffs to minimize bad publicity for the company, or make the company more competitive in the job market, and to have an employee sign a severance agreement waiving any claims the employee may have against the company.
Common provisions in a severance agreement
In most circumstances, the employee will be required to sign a general release of all claims against the employer in order to receive the offered severance package. By signing a release of claims, the employee is giving up the right to sue the employer. The release generally only covers events that occurred up to the date of the layoff or termination. However, the scope of the release can be as broad (i.e., where the employee releases all claims relating to his employment) or as narrow (i.e., where the employee waives the right to sue the employer for specific claims) as the parties want.
In addition to a release of claims, the employee often must agree to certain restrictive covenants. A restrictive covenant is a contract provision that prohibits an employee from engaging in certain activities after the layoff or termination. The most common restrictive covenants in a severance agreement include:
- Nondisclosure (or confidentiality). This type of clause usually prohibits the employee from disclosing the employer's proprietary or confidential information, or any other information obtained during the course of employment, after departure from the company.
- Non-disparagement. Under this sort of provision, an employee generally is precluded from making disparaging, negative or defamatory statements about the employer, or statements that may otherwise harm the employer's reputation. An employee could request a mutual non-disparagement clause, which would require the employer or certain of its employees to refrain from making any negative or harmful statements about the employee.
- Non-competition. Employers will frequently request that employees refrain from starting a competitive business or working for an existing competitor for a period of time following their employment termination. Non-competition covenants must be reasonable in time and geographic area to be upheld by a court, and some states prohibit non-competition covenants altogether or have certain other requirements that must be met before a non-competition agreement may be valid.
- Non-solicitation. This restriction typically precludes an employee from soliciting the employer's employees, customers or suppliers in order to prevent unfair competition.
Conclusion
In Florida, where there is no automatic right to severance, negotiation can be a key factor to receiving a severance payment. If you have a claim against your employer, an experienced employment attorney can help you understand how to leverage a severance settlement. Employers, too, can benefit from legal guidance in structuring employment agreements to mitigate future liability and requiring employees to sign a severance agreement waiving any claims against the company in exchange for a severance payment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
