Part-Time Employees Receive Severance Pay
Severance pay is money that an employer gives to departing employees to help cover expenses during a transitional period. The type and amount of severance pay can vary from company to company, but many employers offer some form of this benefit to their departing workers, especially when they’re being laid off or terminated from a job. Severance pay is not required under federal law, but companies often choose to offer it in order to help employees with the stress of leaving a job and to smooth the way for them to find another one.
The answer to whether part-time employees can receive severance pay is somewhat arbitrary, depending on the circumstances of the termination and the relationship between the employee and the company. Most of the time, severance pay is reserved for professional-level employees who are paid by the hour or salary and are being terminated for performance reasons or for reasons related to layoffs. Typically, the only reason that a part-time worker could be denied severance pay would be if they were being fired for more serious reasons like absenteeism or failing a drug test.
While there is no universal formula for calculating severance pay, most companies follow a similar model that includes paying out the base salary of an employee for a specific number of weeks. Some companies also include other perks, such as continued insurance or career consultation services, in the severance package. Some employers also choose to offer employees the option to keep a piece of equipment or other perks that the company has provided, such as a cell phone or laptop.
Can Part-Time Employees Receive Severance Pay?
In most cases, severance pay is taxed the same as any other income. The employer will likely withhold the appropriate taxes from the employee’s final paycheck and include the severance payment on the W-2 that the employee receives at the end of the year. However, there are some states that require severance pay to be reported as wages, which can complicate the process.
Some companies opt to pay out how to get severance pay in multiple installments, which is known as salary continuation. This means that the former employee will remain on the payroll for a specified period of time until they receive their last check. This may interfere with the ability of the terminated employee to quickly apply for unemployment benefits. Additionally, severance payments over several months may also affect an employee’s eligibility for unemployment benefits because the state will consider those payments as active employment for the purpose of calculating the benefit.
Regardless of the method of payment, a company that is paying out severance payments should make sure to provide clear written guidelines on what exactly is included in the severance package and how the policy will be administered. Failure to do so can result in a conflict of interest for the former employee and penalties for the company under applicable federal and state laws. A lawyer can assist a business with the creation of its severance pay policy to ensure that all requirements are met.
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