Severance Agreements

News & Analysis as of

Eleventh Circuit Holds that Terminated Employee Can Waive FMLA Claims Through the Date of a Release

In a victory for common sense, the Eleventh Circuit Court of Appeals recently determined that an employee could not pursue Family and Medical Leave (FMLA) interference and retaliation claims against her former employer...more

Employment Alert

In This Issue: EEOC's Latest Target - Severance Agreements; Pennsylvania's Unemployment Compensation Law May Require Employers to Provide Response to Unemployment Information Requests; and Supreme Court Clarifies that...more

The EEOC's Latest Target – Severance Agreements

Employers have long offered employees severance or other post-employment benefits in exchange for a waiver and general release of claims. Agreements of this kind often help make a difficult separation somewhat easier. By...more

New York, Unemployment, and Severance Agreements

Before offering severance to a departing employee, New York employers should be aware of recent changes to the New York unemployment insurance law. These changes may affect both the timing and language of the severance...more

Monthly Benefits Update

As expected, the Department of the Treasury and the IRS (the “Agencies”) finalized the employer information reporting requirements under the Affordable Care Act (the “ACA”) earlier this month. The final rules, which are...more

Severance Payments are Taxable under FICA

On Tuesday, March 25, 2014, the U.S. Supreme Court ruled in favor of the Internal Revenue Service in a dispute over the payroll tax treatment of certain types of severance compensation....more

Severance Pay As Wages: Business As Usual

Confirming what most employers have long assumed to be true, this week the U.S. Supreme Court held that severance payments made to terminated employees are “wages” subject to the Federal Insurance Contributions Act (FICA) tax...more

Supreme Court Rules That Severance Payments Are Subject to FICA Taxes

The U.S. Supreme Court has unanimously held that payments of supplemental unemployment benefits (SUB payments) are taxable wages subject to FICA tax withholding. The Court’s decision in United States v. Quality Stores, Inc.,...more

Supreme Court Rules That Severance Payments Constitute “Wages” For FICA Tax Purposes

On Tuesday, March 25th, the Supreme Court ruled that severance payments not linked to State unemployment benefits paid to involuntarily terminated workers were "wages" and thus subject to Social Security and Medicare taxes...more

Is There Quality to the Argument That Severance Payments Are Not Taxable "Wages"? – Supreme Court Holds That Severance Payments...

Earlier this week, on March 25, 2014, the U.S. Supreme Court handed down a highly publicized decision in the case of United States v. Quality Stores. In Quality Stores, the Court unanimously held that the severance payments...more

The Art Of Employee Termination And Severance Agreements

The process of employee termination is fraught with pitfalls for the unwary employer. Not only can emotions run high during this time, but failure to comply with all applicable state and federal laws can lead to legal...more

Employment Law Blog: Severance Agreements - Clarity and Simplicity Are Best

On February 7, 2014, the Equal Employment Opportunity Commission (EEOC) in Chicago brought suit against CVS Pharmacy alleging that the company’s severance agreements for employees interfered with those employees’ civil...more

Recommendations in Response to the EEOC’s New Lawsuit on Severance Agreements

On February 7, 2014, the Chicago District Office of the Equal Employment Opportunity Commission brought suit in the U.S. District Court for the Northern District of Illinois against CVS Pharmacy, Inc., claiming that a...more

Employment Law - Mar 05, 2014

Time To Review Severance Agreements - Why it matters: The Equal Employment Opportunity Commission filed a complaint against CVS Pharmacy last week. The Illinois federal court suit claims the national chain violated...more

EEOC Alleges that Standard Severance Agreement Language Violated Title VII

Certain standard provisions contained in separation agreements commonly used by employers violate federal law, according to the Equal Employment Opportunity Commission ("EEOC"). Specifically, EEOC in a suit filed in Illinois...more

EEOC Lawsuit Against CVS Could Void Standard Severance Agreement Clauses

We all know how severance agreements work. An employee suddenly finds herself out on the street. To soften the blow, the employer offers her a few additional weeks or months of salary. In exchange, the employee waives any...more

Take 5 Newsletter: Five New Challenges Facing Retail Employers

Retailers face new challenges every day as a result of legislation, litigation, and technology. This Take 5 addresses some of these challenges. 1. Pregnancy Accommodation - Several states and municipalities...more

EEOC Lawsuit Challenges Commonly Used Language In Severance Agreements

On February 7, 2014, the Equal Employment Opportunity Commission (EEOC or Commission) sued CVS Pharmacy Inc. in federal court in Chicago to invalidate the company’s standard severance agreement. The lawsuit raises concerns...more

EEOC Continues Its Aggressive Stance Against Severance Agreements

Last Friday, the Equal Employment Opportunity Commission filed suit against CVS Pharmacy in the Northern District of Illinois alleging that standard separation agreements used by CVS unlawfully deter employees, who sign these...more

Drafting a Practical and Enforceable Non-Disparagement Provision

More than once, an in-house counsel has called me up wanting to sue a former employee because s/he has been “bad-mouthing” the company despite having agreed not to disparage the company as part of a settlement or severance...more

Employment Law Newsletter - January 2014

In This Issue: - 2013 Virginia Employment Law in Review - Avoiding Pitfalls of Severance Agreements - Excerpt from 2013 Virginia Employment Law in Review: In anticipation of a new year, the...more

Avoiding Pitfalls of Severance Agreements

As a business owner, it is inevitable that there will come a time when, for some reason or another, you will need to terminate an employee. In many circumstances an employer will use a severance agreement to obtain a release...more

A Lovely Review of Employment Contract Principles

In Lovely v. Prestige Travel Ltd., 2013 ABQB 467, the Alberta Court of Queen’s Bench ordered an employer to pay an executive level employee one year’s base salary, after it terminated his employment one year into a two-year,...more

Are All Severance Plans Subject To ERISA?

I blogged recently about an ERISA case involving an executive severance plan where the executive sued claiming that his employment termination was effective before the first anniversary of a change in control, thereby...more

Bad Faith Termination Can Be Good ERISA Interference Claim

It is not uncommon for employers to have executive severance plans that pay substantial severance if an executive loses employment in connection with a change in control. In a recent federal district court decision, a former...more

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