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Is severance pay required if a restaurant closes?

severance pay

Question:

Am I entitled to severance pay after six years of employment and the place of business closing?

– William T. Brown, Lauderhill, Fla.

Answer:

Restaurant closings are painful for all involved. While some restaurants close and provide some sort of financial cushion for employees, most close as a last resort due to financial difficulties. In those cases, there is typically a line of creditors that will take priority over any employee severance. In some instances, employees—especially at senior levels or those under a collective bargaining agreement—have contracts that require severance pay, but most do not.

To my knowledge, the state of Florida does not require any sort of severance payment, nor is there a national requirement for severance pay. The U.S. Department of Labor states, “Severance pay is often granted to employees upon termination of employment. It is usually based on length of employment for which an employee is eligible upon termination. There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay. Severance pay is a matter of agreement between an employer and an employee (or the employee's representative).”

Some employers will offer severance agreements in exchange for you not pursuing any legal action against your former employer, not disparaging them, or not working for a competing operation.

You should, however, make sure you receive your last paycheck, including any time accrued, such as vacation days.

As always, your best bet is to check with an attorney to discuss your specific situation.

More on severance pay here.

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