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ERISA is the same law that covers employer group health insurance plans.ERISA requires employer who offer ERISA plans to put them in writing and to provide written summaries to covered employees.Severance pay agreements also include severance pay clauses in employment agreements negotiated at the beginning of employment.Unless the parties agree otherwise, the law presumes that their employment relationship is “at-will.” This means it lasts only as long as both parties want it to last.

If an employer fails to pay severance promised in an employment agreement, the employee can pursue a breach of contract claim.Employers who create severance pay plans can and do specify the terms, choose who participates and decide what to pay and when.Employers can modify or terminate severance pay plans whenever they want, and owe only the severance resulting from a triggering that already occurred.Taxes on employers fund unemployment compensation benefits and each state administers. For at-will employees, unemployment compensation benefits fill a function similar to severance pay, providing cash when needed most.Employers can offer employees severance pay benefits in the event of certain job losses, like from a reduction in force.

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