Tips on severance packages, health insurance, unemployment insurance and final paychecks.
Whether you leave your job voluntarily or through a termination or lay off, there are a number of loose ends you will want to tie up as you walk out the door.
Severance Pay
No law requires an employer to provide severance pay to employees it terminates or lays off. Nevertheless, many employers offer one or two months' salary to employees who are forced to leave their jobs. A few are more generous to long-term employees, giving perhaps one month's pay for every year an employee worked for the company.
An employer may be legally obligated to give you severance pay if you were promised it, as evidenced by:
* a written contract stating that severance will be paid
* a promise, in an employee handbook, of severance pay
* a long history of the company's paying severance to other employees in your position, or
* an oral promise to pay you severance -- although you may run into difficulties proving the promise existed.
A severance package can include more than just money. If you are in a position to negotiate a package (perhaps your termination is questionable and your employer wants to keep you from going to court), consider asking for these other goodies:
* Insurance benefits. Health insurance continuation laws require the employee to pay the cost of continued coverage. But there is nothing in these laws that prevents your employer from picking up the tab as part of a severance package.
* Uncontested unemployment compensation. Sometimes, employers will try to contest the unemployment claim of a terminated worker. Ask your employer to agree not to do so. It will make getting benefits a lot easier.
* Outplacement services. Outplacement firms help employees find new jobs. They may offer counseling, job skills training, tips on resumé and cover letter writing and leads on potential jobs. In addition, they may give you a place where you can use a computer, receive faxes and have a receptionist answer the phone. Many employers are now paying for these types of services as part of a severance plan.
* References. If you are leaving your job under less than pleasant circumstances, you might work with your employer to come up with a mutually agreeable letter of reference.
Final Paycheck
Many states have a law that specifies when departing employees must be given their final paycheck. Often, the outcome depends on whether you are leaving because you quit or because you were fired or laid off.
For example, in Colorado employees must be given their final paycheck immediately if they are terminated or laid off but on the next payday if they quit. (Depending on a company's pay cycle, this could be a difference of as much as a month.) In California, terminated and laid-off employees must receive their final paychecks immediately, but employees who quit might have to wait for up to 72 hours.
Some of these laws also specifiy whether your unused vacation pay must be included. To find out about your state's law, contact your state labor department.
Health Insurance
A 1986 federal law -- the Consolidated Omnibus Budget Reconciliation Act (COBRA) -- and similar state laws provide for health insuance continuation when an employee quits, is laid off or is fired for any reason other than gross misconduct.
Under COBRA, employers with 20 or more employees must offer them the option of continuing to be covered by the company's group health insurance plan for a specific period -- often 18 months -- after employment ends. The worker must pay the full cost of this coverage. Family coverage is also included. (In some other circumstances, such as the death of an employee, that employee's dependents can continue coverage for up to 36 months.) To learn more about COBRA, refer to the website of the U.S. Department of Labor atwww.dol.gov.
Your state might have a law with better and broader coverage. This means it may cover smaller employers and/or provide more benefits. Your employer must follow whichever law is most beneficial to you. To find out more about your state's law, contact your state insurance office or labor department.
Unemployment Insurance
This program may provide some financial help if you lose your job, temporarily or permanently. Benefits will be less than your former pay, and they won't last forever (usually, they stop at about 26 weeks). Also, not all out-of-work individuals are entitled to unemployment benefits. You will be eligible only if you lose your job through no fault of your own.
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