Agreement for severance payment

[singnjazz]

Employee lives in Washington but works in Oregon.

The company, knowing it would either be sold or close its doors, asked a transition team to stay on while most other employees were laid off. As an incentive, the company gave these employees a letter promising eight weeks of severance pay if they were terminated for any reason other than the acquisition of the company, and six weeks if an acquisition caused the layoff. (The company carries an insurance policy to pay for this.) Although the letter is not specific, the employees generally understood the amount to be intended as a lump sum payment, partly because another part of the letter discussed a retention bonus in the event the company was acquired. This understanding has been reinforced by the words and actions of company executives since the letter was distributed.

Now the company intends to lay off the remaining employees, and ask them to sign an agreement that the severance package will not be paid in a lump sum, but instead paid out over the eight weeks. This is a problem for many employees because they will not be eligible for state unemployment if the payments are stretched out, though they will be immediately eligible if the payment is made in a lump sum.

Is the company legally obligated by the first letter to pay the severance in a lump sum? What are the rights of the employees if they refuse to sign the new termination agreement? If an employee sues the company in small claims court, what sort of remedy might the court order, and how long does it typically take to complete such a court action? How long would the company have to pay what the court ordered?

Thanks in advance for your help and information.

 

[cbg]

In most states that I am familiar with, although you would not be eligible to receive UI until after the severance pay is complete, the severance itself is MORE money than the UI would be. This being the case, I'm having a hard time understanding why this presents a hardship. At least in my state, you would have some income coming in (either severance or UI) for a longer period of time by signing the agreement you indicate. I'd sign it in a heartbeat if it meant I'd have income for 8 more weeks. Please explain.

 

[singnjazz]

The problem lies in the fact that a lump sum severance payment doesn't interfere with UI at all. For instance, if you were to receive a $10,000 severance package in a lump sum, then you would immediately ALSO be eligible for UI. So again, I reiterate that the company is NOT upholding the terms of the original agreement, and those terms are far more advantageous than the change the company proposes.

Again, my question is not whether the employees are better off... it is what the LEGAL recourse is!

 

[cbg]

Talk to the state DOL.