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Severance Packages Being Cut

Published by on October 28, 2008

Business Week has an article entitled “Now Severance Packages Are On The Chopping Block” here.  One lawyer quoted in the article refers to severance pay as a “gift.”  That is fairly accurate because severance pay is — in almost all states — a function of what the employer is willing to pay.  In most cases, […]

Business Week has an article entitled “Now Severance Packages Are On The Chopping Blockhere.  One lawyer quoted in the article refers to severance pay as a “gift.”  That is fairly accurate because severance pay is — in almost all states — a function of what the employer is willing to pay.  In most cases, severance pay is a matter of contract between the employer and employee.  In exchange for the severance pay, the employer usually obtains a general release of all claims that the employee might have against the company.  In a tight economy, the elimination or dramatic reduction of severance pay is one factor that results in more employment lawsuits because employees are more willing to pursue their claims in court rather than take a small severance payment.

UPDATE (11/13/2008):  A Reuters article linked on the Connecticut Employment Law Blog supports our earlier comment that tough economic times may lead to an increase in employment litigation.  The article is entitled “Tough times spur laid-off workers to sue.”

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