Some people think they’ve received a severance package when, in reality, it’s just mandatory WARN Act pay required by law during mass layoffs. Here’s how to know the difference and ensure you’re getting what you deserve.
Imagine the excitement of thinking you’ve secured a great severance deal without a fight, like my friend from Manhattan who believed he got three months of severance after being laid off. He dreamed of sipping drinks on a Caribbean beach, relieved by the cushion his “severance” would provide. However, this wasn’t a severance package at all. It was simply WARN Act pay—something entirely different.
What many don’t realize is that a true severance package is entirely at the discretion of the company and is not mandated by law. It usually includes benefits like continued health insurance, job placement assistance, and sometimes even a few glowing references. Unfortunately, my friend received none of these. Instead, he only received what New York law requires for mass layoffs, which is three months of regular pay.
This kind of pay is standard under the Federal WARN Act, which mandates up to two months of salary for affected employees in mass layoffs. However, in states like New York, this extends to three months. While it might sound generous, this isn’t the company going above and beyond for their employees—it’s just them following the law.
A real severance package, on the other hand, would be on top of any WARN Act pay and could significantly extend the financial support provided. For instance, my friend could have potentially negotiated an additional 14 to 21 weeks of severance based on his years of service, along with benefits like COBRA health coverage at no cost to him and career transition services.
Moreover, companies save substantial amounts by not offering genuine severance packages. For example, by avoiding a true severance package, my friend’s company saved about $45,000 on him alone. Multiply that by numerous employees, and the savings can skyrocket, all while employees remain unaware of what they’ve truly missed out on.
Remember, if you’re laid off, especially later in the year when companies tighten their budgets, negotiating even a small severance package is crucial for bridging the gap until you find new employment. Always distinguish between mere WARN Act pay and a real severance that includes additional benefits and compensation. And don’t leave potential negotiations on the table—knowing the difference could significantly impact your financial stability after a layoff.
