Employee Rights After a Job Termination

Employees terminated by an employer have legal rights under federal law. An employee must receive a final paycheck within a certain time frame. They also must have the option of continuing health insurance coverage. They may be eligible for severance pay and unemployment compensation benefits.

There are steps you can take to help protect yourself after losing your job. It's also important to understand your rights after a job termination.

At-Will Employment

In most cases, employment is at-will. At-will employment means an employer in the private sector can fire an employee at any time and for any reason. But wrongful termination of an at-will employee is possible. Termination may be unlawful if:

• The employment relationship is controlled by an implied contract. An implied employment contract may exist if the employer promised continued employment or the employer failed to abide by its employment policies about termination.

• The employee's firing violates public policy. Examples include firing an employee for having jury duty, serving in the military, or refusing to engage in illegal conduct.

• The employee's termination violates laws prohibiting discrimination. Federal and state laws prohibit employment discrimination based on race, age, national origin, disability, sexual orientation, or religion.

• The employee's termination was in retaliation for a specific act protected by law. An employer cannot fire an employee for whistleblowing. An employer may not terminate an employee for reporting sexual harassment, discrimination, or OSHA violations.

Final Paycheck Laws

Many states have laws about when employers must issue a final paycheck. Generally, this depends on whether the employee quit or was fired. State and federal laws may not apply if the employee's contract or collective bargaining agreement states otherwise.

Severance Pay

A severance agreement is a contractual agreement between an employer and an employee. The agreement typically includes these terms:

• The terminated employee releases the employer from all liability
• The employee receives a lump sum payment
• The employee receives health insurance coverage for a period of time after employment

Severance packages may include other perks like retraining services or employment placement.

The Fair Labor Standards Act (FLSA) doesn't require employers to offer severance packages to terminated employees. Whether an employer offers severance often depends on the agreement between the employer and the employee. An employee may have rights to a severance package if:

• The terms of a written contract provide for severance pay
• The employee handbook documents the employer's policy on severance pay
• The employer has a history of offering severance pay to other employees in the same position
• The employer made an oral promise to offer severance pay

Although not required by law, many companies do offer severance pay. In general, the amount the former employee receives depends on the length of employment and the reason for the termination. For example, some companies may offer two weeks' pay for each year employed.

Health Coverage

Terminated employees have the right to continued health insurance coverage after leaving employment. The Consolidated Omnibus Budget Reconciliation Act (COBRA) grants terminated employees the right to continued healthcare coverage. Under the law, an employer with 20 or more employees must offer the option of continued participation in the employer's health insurance plan.

The former employee will pay the full cost of coverage. Premiums can run up to 102% of the total cost.

Unemployment Compensation

A terminated employee may be able to replace some lost income by receiving unemployment compensation. If qualified, the unemployed worker may receive compensation while searching for employment. Employees qualify for unemployment during layoffs or if they were fired without cause.

Generally, unemployment compensation is less than the employee's regular pay. The amount is a percentage of the employee's pay during the previous year. An unemployed worker can receive benefits for 26 weeks, and the worker may receive an additional 20 weeks of unemployment benefits for good cause.

Protect Your Rights: Call an Attorney

Losing a job is often stressful and sometimes humiliating. Labor laws protect your employment rights, even if you were fired. If you need legal advice, contact an employment law attorney near you.