Under Florida law, a business is generally not required to pay severance to a terminated employee.
The U.S. Department of Labor generally does not require employers to offer severance pay. However, the existence of an agreement outlining severance terms creates a legal obligation to satisfy those terms.
What Is Severance Pay?
Severance pay is compensation an employer provides to an employee after termination of their employment. Monetary payment is not the only form of severance. Severance may also include extended benefits such as health insurance, retirement accounts, stock options, and assistance in searching for new work.
Severance pay in Florida also includes payout of unused accrued “paid time off” or PTO, vacation pay, or sick leave. The months of service or the term of employment typically provides the basis for monetary severance calculations.
In Florida, severance pay usually applies when an employee is laid off or retires early—not terminated or fired. Severance pay protects the newly unemployed and is typically viewed as a gesture of goodwill.
Severance pay provides a previous employee with support until they secure a new job. However, when the employer has had a dispute with a departing employee, severance pay may be bargained to deter future legal action.
Elements of a Valid Severance Agreement
A strong severance agreement may protect against any future legal action by the employee.
Because employees are only required to be paid severance according to an agreement between employer and employee, it’s important for that agreement to also include the benefits the employer gets in exchange for paying severance to the employee.Employers’ Attorney Kristi Benson
Depending on the facts of the termination, an employer may want to include the following terms in a severance agreement.
Release of Legal Claims
If the potential for future litigation exists, the inclusion of a release of future claims is necessary. A release of general claims requests that the employee also agrees to release the employer from any potential claims they may have against the company.
Confidentiality and Non-Compete Restrictions
Confidentiality or non-compete restrictions may be a vital element of a severance agreement in Florida.
Specificity of confidentiality clauses vary and request that the employee not divulge any proprietary information about the company or the employee’s employment.
Non-compete clauses limit the employee’s future employment in a similar business over some time and in a certain geographic area. Non-compete clauses in Florida are enforceable as long as they are reasonable and protect a legitimate business interest.
A mutual non-disparagement clause provides both the employer and the employee agree not to speak negatively about the other.
Mutual General Release
A mutual general release releases both the employer and the employee from any future legal action.
Neutral Reference or Reference Letter
Severance agreements may include a neutral reference or reference letter. A neutral reference provides that employers may provide only dates of employment and position to requesting future employers. A reference letter goes further and provides dates of employment, position, and a positive statement.
If you are contemplating the termination of an employee or need assistance drafting strong severance agreements, contact the experienced Florida business law attorneys at BrewerLong. We are the premier employer’s law firm in Orlando and work tirelessly to protect you and your business from future litigation. Contact us today!
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