What You Need to Know About State Severance Pay Laws

Severance pay is the compensation granted to employees if they experience termination from their job. Here’s what you need to know about severance pay laws by state.

Under the Fair Labor Standards Act, no requirement for severance pay exists. Hence, each state has different laws, from the deadline employees must receive their severance pay to if a state requires severance pay at all.

Severance Pay

Severance pay is pay employees receive upon termination from employment. The length of employment often determines the amount an employee receives. Most often, severance pay is one to two weeks for every year worked. Hence, if you worked for three years at the business you could possibly get 3-6 weeks of severance pay once terminated. In the Fair Labor Standards Act (FLSA), no requirement for severance pay exists. Hence, severance pay is an agreement between an employer and an employee. The FLSA established minimum wage, overtime pay, recordkeeping, and child labor standards for full and part time workers in the private sector and federal, state, and local governments. However, the Employee Benefits Security Administration (EBSA) can assist employees who did not receive severance pay under their employment contract.

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Employees should always remember each state differs on the severance pay amount and deadline because FLSA does not possess a requirement. For example, Florida does not require severance pay and if the employer offers severance pay, the payment may not exceed 20 weeks of compensation. California possesses no requirement for severance pay, leaving compensation at the employer’s discretion. New York also does not require employers to provide terminated employees with severance pay. However, many employers choose to pay their terminated employees severance pay when they are terminated, laid off, or retired.

Severance Paycheck Deadline

The following states have no deadline for the final paycheck: Alabama, Florida, Georgia, and Mississippi. These states have a deadline of the next payday: Delaware, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Mayland, Michigan, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. However, exceptions may apply.

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California, Colorado, Hawaii, Illinois, Massachusetts, Missouri, and Montana require employers to pay severance paychecks to terminated employees immediately. The remaining states vary from 24 hours to 7 days. Hence, the majority of states require employers to pay severance before the next payday.

FAQs About Severance Pay Laws

What is the Employee Benefits Security Administration?

The Employee Benefits Security Administration (EBSA) is part of the U.S. Department of Labor and works to inform employees of their rights in a variety of labor situations, including if they experience termination from their job. The EBSA also informs employers and advisors of their rights and responsibilities under the U.S. labor laws.

What does severance pay usually entail?

Severance packages are often one to two weeks of paid salary for every year worked. As well, employers often provide insurance benefits as assistance until the terminated employee finds a new job. Most often, employees have 21 days to accept a severance package and once signed, they have seven days to change their mind.

Can I get severance pay if I quit?

Severance pay laws vary depending on the state. If an employer offers an employee severance pay when the employee begins employment, the employee is often entitled to severance pay if they quit.

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