Acceptance and Delivery of Severance Package for the State of Arizona

I was terminated from employment on 12-31-2008 due to downsizing. I am due to receive a severance package. Is there a law in Arizona which dicates a specific time frame in which that benefit is required to be paid and if so, what is the recourse? I know California has a law which allows employers 23 days. After that time period the company is liable for salary wages until the severence package is received. Thanks

1 answer  |  asked Jan 30, 2009 5:30 PM [EST]  |  applies to Arizona

Answers (1)

Francis Fanning
No law regarding payment of severance

Arizona law does not require the payment of any severance benefits. I doubt that California law does either. I'm not sure where you got the information that California law requires that severance be paid within 23 days or that salary continue. My brief research turned up nothing that suggests that California has such a law.
Severance pay is something that an employer typically offers to an employee when the employee is being laid off, and the employer typically requires the employee to sign an agreement releasing the employer from liability in return for the severance pay. Because it is not required by law, the terms under which it is paid are governed by the severance agreement itself. Some employers pay a single lump sum, and some pay periodic payments in the form of a continuation of salary.
Arizona statutes require that wages be paid at least twice monthly, that no more than five days' wages be withheld (which means, in effect, that wages must be paid within five days of the end of the pay period), and that when an employee is involuntarily terminated, all wages due are to be paid within three days. Although the definition of "wages" includes severance pay "when the employer has a policy or practice of making such payments," most employers don't pay severance pursuant to an ongoing policy. They typically decide whether to pay and in what amount when they decide that they need to lay people off. If the severance agreement states when the payment is to be made, the agreement governs. If it does not state specifically, then a court would infer a reasonable time for payment to be due, which would typically be not more than what is necessary to complete the administrative requirements.
Severance agreements often contain provisions necessary to conform to the Older Worker Benefit Protection Act, which include a 21 or 45 day period for the employee to consider the agreement and a 7 day period after signing during which the employee can rescind the agreement. Such agreements usually provide that the severance benefit will not be paid until the seven day period has expired.
I would suggest that you read the agreement carefully to see if it makes any reference to time for payment. If you have not yet received it, you may want to contact the employer about whether it has been sent out. Since severance pay is not required, you have no recourse if the employer decides not to offer it.

posted by Francis Fanning  |  Feb 3, 2009 3:29 PM [EST]

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