Legal Question in Employment Law in California
Severance Pay with regard to Outsourcing
The company I work for outsourced part of our support organization to another company. I am currently on a pay to stay while they finalize the contract. My employer said they would try and place us with the outsource company or with one of their affiliates. If they can't find us another position they would give us a severance package. I have been extended an offer and have excepted it from the outsource company. My company said that if we did not except the offer we may not be eligible for a severance package. They have payed out severance and termination pay to other employees already. My question is shouldn't I be eligible for severance whether I except the job or not? I am being severed from my current company or as they say being transitioned. Any way you cut it I no longer work for them. Thanks in advance..
1 Answer from Attorneys
Re: Severance Pay with regard to Outsourcing
This response assumes you work for a CA employer within CA. Severance pay plans may be considered employee welfare benefit plans under federal law (ERISA). Generally, many of ERISA protections with respect to entitlement to employee benefits are simply not applicable to severance pay plans. Moreover, employers typically retain control to establish, modify or eliminate altogether the terms and conditions of a severance plan. Thus, discriminatory treatment of certain employees with respect to qualification for severance benefits may be allowed under your employer's severance pay plan under special circumstances. Your employer's severance plan appears to have carved out a condition (continued employment services) with respect to your qualification to receive severance benefits, even though this same condition may not apply to other employees. On the other hand, your employer may have misunderstood the application of ERISA protections to you. Thus, you may want to consult with a local employee benefit attorney regarding your concerns before taking any action.