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When can an employer refuse to provide a severance package?

On Behalf of | May 7, 2024 | Uncategorized

Sudden job loss can be a very inconvenient experience. Particularly when the job market is soft, professionals may need to devote months before they find a new position elsewhere.

The average professional doesn’t have enough money in their savings account to cover their basic cost of living expenses for very long without income. Particularly when an individual has enjoyed a relatively comfortable standard of living and when they work in a highly-skilled or educated profession, downtime between jobs could lead to financial hardship.

Many people expect to receive help from their former employers after the end of their time with the company. Workers accepting new roles or responding to a sudden termination often request severance packages from their employers. Can a worker in Washington take legal action when an employer refuses to provide them with a severance package?

Severance pay is not mandatory

Contrary to what some people believe, Washington state law does not impose mandatory severance pay requirements. The laws in the state addressing severance specifically discuss rules regarding how to apply tax rules to severance packages and termination pay.

The requirement to provide severance pay comes from an individual’s employment contract or the negotiations that occur prior to their termination. Severance packages frequently include terms that grant workers a certain amount of wages, a payout of accrued paid leave and possibly the continuation of certain insurance coverage during their transition. Those packages can cost companies thousands, so workers may face opposition.

Oftentimes, severance agreements include clauses that allow employers to withhold severance pay in certain specific situations. Those situations may include termination for cause. If a company has evidence of misconduct or a worker’s consistent failure to meet performance metrics, those company records could help justify a decision to deny the employee severance pay.

Workers seeking their severance packages often need to scrutinize the circumstances leading to their termination. It is sometimes possible to hold an organization accountable for the failure to uphold an employment contract including severance pay terms.

Pursuing an employment lawsuit could help workers obtain the severance pay they deserve after a company terminates their position. Learning about the law and reviewing employment contracts with the guidance of a skilled legal team can help people verify if they are in an actionable position after losing a job.