What should be in your employee’s severance payment?
You are probably aware that State laws governing employees' final pay upon termination vary widely. As your company grows, needing to terminate an employee may come up more often. To avoid legal hassles, you should make sure your HR people know how to legally cut the employee’s severance payment check.
For example, a laid-off employee's severance payment may be due immediately upon termination (e.g., in California), or not until an employee's next regularly scheduled payday (e.g., in Florida).
Likewise, an employee's entitlement to payment for accrued vacation and/or sick time, commissions, and bonuses varies by state.
There are different rules in each state for whether the employee is entitled to:
- Accrued vacation
- Accrued sick time
Failing to pay an employee as required by law can subject you to costly unpaid wage claims and additional civil penalties. You should encourage your HR resources to take a look at applicable laws to determine amounts owed to employees.
Modern Business Associates frequently deals with HR issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including designing legal processes for terminations and council when calculating a legally abiding severance payment.
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