Severance benefits are payments made to employees upon the termination
of employment. Employers may choose to pay severance benefits under a number
of circumstances, including workforce reductions, plant closings, mergers
and acquisitions, incentives for early retirement programs, or in exchange
for a general release of claims to discourage terminated employees from suing
the company. Severance benefits may include salary and health benefit continuation,
outplacement counseling, accelerated vesting of stock options or rights to
purchase stock, bonus payments, and forgiveness of loans. Severance benefits
may be paid pursuant to a formal severance plan regulated by ERISA or may
be offered as an informal severance package. Employees who are offered severance
benefits should be asked to sign a general release of all claims against their
employer, and if the employee is 40 years of age or older, the release must
comply with the Age Discrimination in Employment Act (ADEA) and
the Older Workers' Benefits Protection Act (OWBPA).
BLR does not provide Hawaii analysis for Severance Pay. This may be because there is no applicable state law for private employers or because the state follows federal law in this area.