Severance Package Points Employers Should Know
As a small business owner, you know a couple of life lessons. One lesson is that the pressure is definitely on, as in every day, all day long. And the second lesson is about employees, keeping track of them, training them, keeping them happy. That responsibility alone can feel about as easy as herding cats.
The point is that life as a small business owner requires a long list of responsibilities, which is why The Payroll Department is such a resource for small business owners. So when we find ourselves at odds with a difficult employee, we know it’s a stress employers don’t need. But if you aren’t completely in the know about Indiana employment laws and severance packages, you could be flirting with yet another headache, the potential for a lawsuit.
First, let’s look at the various definitions of a severance package. Some packages might include salary, benefits and health care compensation for a set amount of time. You might also include accelerated vesting of stock options and the right to purchase stock. Bonus payments and out placement counseling to assist the employee with finding another job may also be included. Any time employees leave your company, they should sign a general release of all claims against you, the employer. If the employee is 40 years of age or older, another signature is required to show compliance with the Age Discrimination in Employment Act.
As we know, severance benefits are paid to employees when they are terminated. But there may be several reasons why an employee leaves your company:
- Workforce reduction
- Plant closing or merging with another company
- As an incentive for early retirement
- In an effort to discourage a negative employee from filing a lawsuit against your place of business
That’s a lot to remember, especially when you have added pressure of a disgruntled employee filing suit against you. Remember that you don’t have to keep up with every single detail. Call or contact The Payroll Department to stay abreast of these state laws. It will very likely mean you can concentrate of workplace leadership … and get a full night’s rest again!
-Sherri of The Payroll Department Blog Team