An employer is not required to provide severance benefits under the Fair Labor Standards Act, but many employers do offer severance packages to their employees at the time of their termination, or as a negotiated part of their employment contract from the beginning of their employment. These agreements often contain the amount of the benefits to be paid, the type of benefits, and the duration of benefits, as well as defining any situations in which benefits may be denied.

In some situations, if an employee becomes disabled, the employer may ask him or her to sign an employment or settlement agreement, which often contains extra compensation or severance pay. However, these agreements often contain a release of claims, which can directly impact the employee’s right to file a claim for long-term disability benefits under the employer’s benefits plan governed by ERISA. By signing this type of agreement, then the employee potentially could waive his or her right to claim long-term disability benefits altogether or waive his or her right to appeal a denial or termination of benefits. On the other hand, the employer may not agree to pay the employee severance if he or she won’t sign the agreement.

Another possibility is for the severance pay to qualify as an income benefit that is “deductible income.” This means that any disability benefit that you receive would be offset or reduced by the amount of severance pay that you receive. In other words, you may not be able to get both severance pay and disability benefits, except to the extent that the disability benefits exceed the severance pay.

Severance pay and other monetary benefits may affect your ability to draw long-term disability benefits from your ERISA disability plan. These long-term disability claims can be complex matters that require intensive knowledge of ERISA law and how those laws affect long-term disability insurance policies. As a result, you will need experienced legal representation and advice to pursue an ERISA-governed disability claim. Bonnici Law Group is a law firm focusing on ERISA long-term disability benefits and bicycle injury cases in San Diego, CA. When you need effective legal representation, contact Bonnici Law Group at 858-261-5454 or email us at help@bonnicilawgroup.com.