What is an employer required to Pay?
No law requires an employer to pay severance pay. The Fair Labor Standards Act (FLSA) requires that an employer pay an employee whose employment has been terminated their regular wages through their completion date and for any time that the employee has accrued.
This normally includes accrued vacation time, but not normally sick days. But, severance pay is totally up to the goodwill of the employer unless the employer is obligated to pay by an employment contract or by a severance policy stated in the employee handbook or elsewhere in writing.
Because of the way unemployment compensation is calculated, in most states, paying the severance in a lump sum during one weekly paycheck may be in the employee’s best interests. This reduces the unemployment compensation in the week it is paid, but enables the employee to collect the full amount going forward. If the severance is paid weekly over time, the unemployment compensation will be reduced.
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