Knowledgeable Attorney Helping New Jersey Employees Negotiate Severance Agreements

Protecting the rights of workers for more than 30 years

Losing your job can put you in financial peril and touch off important questions, particularly when an employer hands you a severance agreement and expects a quick signature. While the payment might be very important at this difficult time, the agreement may also require you to release valuable legal claims or accept restrictions that affect your future employment. Kevin T. Kutyla, Esq., advocates for recently terminated workers in Sussex and Morris counties, as well as other New Jersey location. I am committed to helping clients manage their employment transition successfully by obtaining favorable severance terms.

Are employers required to provide severance pay in New Jersey?

Except for some situations involving mass layoffs that are subject to the New Jersey WARN Act, most employers in this state are not automatically required to offer severance pay to employees who are being dismissed. A right to severance, however, may arise from an employment contract, collective bargaining agreements or company policy. Many employers will also voluntarily offer severance packages to high-level employees in exchange for a release of any potential legal claims.

How is severance pay calculated?

When they choose to offer severance pay, employers commonly base an offer on length of service, position, salary or internal company policies. A typical formula might provide one or two weeks of salary for every year worked. Alternatively, an employer may offer a flat amount or continue regular pay for a specified period. The package may also address matters such as:

• Payment for unused vacation or paid time off
• Bonuses, commissions or other earned compensation
• Continued health insurance or employer-paid COBRA premiums
• Stock options and other equity benefits
• Retirement plan treatment
• Outplacement services
• Attorney fees associated with reviewing the agreement

For a covered WARN Act payment, the applicable rate is generally based on the employee’s average regular compensation during the final three years, or the employee’s final regular pay rate, whichever is higher.

Can a dismissed employee negotiate severance terms?

Yes. A severance offer is typically negotiable, although an employer does not have to accept proposed changes. An employee may request additional compensation, extended insurance coverage, a neutral employment reference or revisions to confidentiality, nondisparagement and restrictive covenant provisions. The strength of the employee’s negotiating position depends on the circumstances. Potential discrimination, retaliation, unpaid compensation or cases involving wrongful termination allegations may give an employee leverage. Performance history, years of service and the prior treatment of similarly situated employees may also support a request for improved terms. I can review both what the agreement offers and what the employee must give up in return and help assess all available options.

How much time is there to review a severance package?

There is no single review period that applies to every New Jersey severance agreement. The deadline may be established by the employer, an employment contract or the terms of a severance plan. In addition, federal law provides special protections and extended time to employees aged 40 or older who are asked to waive claims under the Age Discrimination in Employment Act (ADEA). Employees should not assume that a short deadline prevents them from requesting additional time, but do not hesitate to consult with a qualified employment law attorney.

Can someone receive both severance pay and unemployment benefits?

New Jersey employees can often receive unemployment benefits while collecting genuine severance based on past service. Severance paid periodically or as a lump sum does not ordinarily extend the employment period or bar eligibility. Different rules apply, however, when the payment is considered a salary continuation through a future termination date or compensation in place of required notice. The employee may still be considered employed during that period and therefore ineligible for unemployment benefits until it ends.

Speak with an employment lawyer before signing any severance agreement

Kevin T. Kutyla, Esq. advocates for terminated and laid off employees during severance negotiations. From offices in Succasunna, Newton and Vernon, my firm serves clients throughout New Jersey. Please call 973-940-8970 or contact me online for a consultation.