Add Severance Plan Digisign with airSlate SignNow

Add Severance Plan digisign

Oh good morning and welcome to optimum solutions webinar about termination and severance aid my name is Susan Warren and I'll be your presenter today and sherry Dwyers also with us we're going to talk to you about well not the most cheerful thing that payroll professionals have to deal with but nonetheless something that you must know details about here's our agenda for the day we're going to look at federal and state laws related to termination pay and severance pay so look at why your company should establish policies directly related to departing employees we'll look at some details of both severance pay and termination pay and discuss the similarities and differences some of which involve deductions Cobra and HIPAA involved in job loss about downsizing and what happens when there are involuntary separations because of plant closings or layoffs and we're going to look at some really exciting no one ever said chart of deadlines that govern when you must deliver the final pay to employees who are either involuntarily or voluntarily separating from your employment because those deadlines are different for involuntary termination and voluntary resignations now those charts may not be exciting but they are very important so we're going to spend a little bit of time looking at those charts times when employees leave it's not pleasant but sometimes it's not so bad have you ever had one that entertains you on the way out watch this and everybody Derrick's shape everyone I got an announcement to make and I got my friends here to help me out [Music] [Applause] okay well looks like my internet got interrupted there a little bit but what he's saying is I'm quitting this job today I'm moving on and I am gone I am leaving so wouldn't it be great if all terminations went that way they could just entertain you as they walked out the door they don't all go that way and we all know that so actually before we get started on the legal do's and don'ts I want to take just a minute to speak to your compassionate side while all employees exiting don't go like the guys singing on his way out in a tuxedo when an employee leaves that process should be as painless as possible for everyone involved best practice does not call for outrageous deductions or vengeful tactics if there are strained relations and everyone knows that sometimes there are strained relations at terminations be the bigger party and exhibit your professional best image this is just another opportunity to brand yourself and retaliation is not how you want to be remembered and besides speaking of legal do's and don'ts the Fair Labor Standards Act says that you can't take an employee's pay below federal minimum wage anyhow so if you're only paying someone for a few hours on that last check don't worry about deductions too much because the law might not permit them anyway also be sure you know your state minimum wage here too because state laws may come into play for a salaried employee an exempt employees final pay can be prorated if they did not work a full pay period and we're going to look at it in detail and a little bit but while FLSA just says that you have to issue final pay by the employees next regular pay date state laws actually have a lot to say on the deadline about when you issue that final pay while FLSA does not have anything to say about whether an employer must pay unused PTO you do need to look up your state rule for example California says that you must pay accrued PTO in the final check but ignorance is no defense if you violate state laws and those fines can really add up and one way to avoid incurring those penalty risks where termination and severance are involved is to lay out your company policy in writing check with your state and find out what you must do and then decide what you want to do optionally for example if you're not in California will you pay for unused PTF if you have exempt employees who don't work a full pay period will you prorate and only pay them for the portion they worked or will you pay for the full pay period you may not want to actually publish details about severance pay in your company handbook that doesn't exactly make for happy reading but it's a good idea to have a plan about severance pay severance is often based on length of employment something like so much for every year of service or something like that severance pay is a matter of agreement between an employer and an employee severance pay is not the employees final paycheck for the last work period it is a payment over and above what you are liable to pay or work performed severence is offered to employees who were terminated through no fault of their own severance pay is taxable for all federal taxes but check your state taxes for federal income tax severance pay does qualify as supplemental wages along with an offer of severance an employer might also ask an employee to sign a release now that release could be release of claims that the ex-employee might make against the employer and there are different types of releases for individuals and groups and since you all know that I am NOT a labor attorney and I don't even play one on TV I am NOT going to attempt to explain those differences to you but I will tell you that they exist and if you need to know more about that topic you should seek legal counsel there are several different type of severance pay and they include lump sum where one large payment is made to the separated employee or salary continuation and this would be where the separated employee is for all intents and purposes still on the payroll just like your active employees however in this case remember to remove the state unemployment tax codes from these employees because you shouldn't have state unemployment tax codes on terminated or separated employees you periodic payments might be another type of severance pay where multiple checks may be issued to the separated employee breaking up severance into smaller bits over a longer period of time and you may have some different rules that apply to employees who have been severed or separated for example stock options might have different rules that apply employees who have been terminated for just calls usually forfeit options to purchase shares at the set price and generally the employees right to exercise stock options ends or is at least limited with termination if you pay and terminate employees in the state of Oregon Rhode Island and Tennessee state law says that you must pay accrued vacation pay at termination unless termination was the result of misconduct but check with legal counsel before you would hold a lot of deductions on this pay remember our opening discussion about compassion and best practices calling for keeping away from vengeful tactics try to keep the termination process as amicable as possible the federal law is not directly address severance pay there are no rules about how to calculate it or when it's due however there is an agency called the employee benefits Security Administration or EBS a who can assist employees who does not receive severance pay that was required in an employment contract to make sure that you are living up to your end of any contract that you may be party to that's a little bit about severance pay so let's talk now about termination pay termination pay termination can be either voluntary or involuntary and termination pay is the last paycheck due to the employee for the last work that they performed but there's more determination pay than just paying the employee you also have to notify all of the other parties that might get paid when the employee gets paid like any child support state disbursement unit or garnishment payees tax levy agencies the 401k administrator and you have to instruct the employee about how they can move their 401k monies to an IRA or a different 401k if they want to you have to instruct the employee regarding Cobra and how they and their eligible dependents can elect to participate in Cobra both Cobra and HIPPA information need to be provided to terminated employees and there's standard information to be shared for each I think you're probably all familiar with those Cobra of course gives ex employees and their dependents an opportunity to choose to continue group health benefits provided by the employers group health plan for a limited amount of time the individual would have to pay the entire premium plus an administrative fee and Cobra usually applies to employers with 20 or more employees and there are always specific rules and guidelines or COBRA coverage that differ with each plan and each employer so you need to know your specific rules and guidelines for your specific company plan Pepa or the Health Insurance Portability and Accountability Act protects the unemployed individual by providing a statement that he or she has been covered by a group health plan and is eligible to be covered by a new plan this way if the individual has pre-existing conditions the new employer can be sure that the employee has been covered and health status is not an issue HIPAA might also allow the individual to buy health insurance if they don't have an opportunity to become covered under a group health insurance plan or it's COBRA coverage expires now in the case of a plant closing or a layoff the worker adjustment and Retraining Notification act or warn Act requires employers with 100 or more employees to provide at least 60 calendar days advance written notice of a plant closing and mass layoffs that will affect 50 or more employees at a single site there are some exceptions mostly in cases of emergencies and natural disasters so if you're hit by a tornado or a hurricane of course you're exempt from giving 60 days advance notice but if there's a planned closing or layoffs and you fit the criteria with a hundred workers that it's going to affect 50 workers at a single site you do need to plan to get that 60-day notice Warren was legislated so that separated employees might have advance notice of prospective job loss and of course have a better chance to find other job Warren does specify that both hourly and salaried employees must be notified as well as employees representatives for example if you have union employees you need to notify the union representative and you also need to notify local elected officials and you need to notify your state unemployment agencies the Department of Labor administers warn but there is no penalty imposed by the Department of Labor in cases where notice was not given however some states have their own dislocated worker laws so do check with your state before you plan any plant closing or layoffs now here come those exciting tables that I promised earlier you may want to be prepared to snag a screenshot of these slides when your state comes up and there are slides for both voluntary and involuntary terminations for all states for Swift termination result at the employers decision that of course is involuntary on the employees part Alabama Florida Georgia and Mississippi have no rule regarding when the final pay is to be issued in involuntary termination twenty-three states stipulate that final pay must be paid on the next regular pay day and all the other states have varying rules I'll go through these slides lonely enough for you to get a screenshot here's the slide for involuntary termination deadlines for Alabama through the District of Columbia here's Florida through Indiana Iowa three Montana nebraska through ohio Oklahoma through Utah and Vermont through Wyoming and when the employee voluntarily resigns the deadlines are a little bit different seven states have no provision at all 41 states they pay it on the next regular payday and the other states vary from immediately to other rules here are those tables Alabama through the District of Columbia Florida through Indiana Iowa 3 Missouri Montana through Ohio Oklahoma through Utah and Vermont through Wyoming these tables are all in the American Payroll Association payroll source group and this information can also be obtained off the different state if you didn't capture a screenshot of your state you can also get it from me of course your software support rep so just let any of us know and we'll get that to you if you need that those are the different tables for voluntary and involuntary deadlines for getting that final pay to your terminated employees there are some differences be sure you're familiar with your state rules because the penalties can really add up once you start accumulating penalties if you do accumulate penalties it's not just the penalties you can incur penalties that include attorney fees and court costs and things like that so it adds up quickly if penalties do start accumulating so you really want to be sure that you're in compliance with all of those deadlines I told you those were exciting we want to thank you for joining us today we hope you've learned some tips about termination and severance pay and we want to remind you to please be on the lookout for more of our educational webinars coming soon and we hope that you have an optimum day thanks everybody