Workplace Closures and Severance Pay

Vox reported that employees of the department store Sears were let go after the retailer announced it was shutting down its stores. Many store associates were told they would receive an eight-week severance package, but, according to the article, after two weeks, the checks stopped coming after Sears announced it was filing for bankruptcy. Meanwhile, Sears executives were allowed to collect $25 million in bonuses after the filing, according to the Chicago Business Journal.

This is not the first time a big-box retailer has done this. When Toys R Us filed for bankruptcy in September 2017 after closing all of its stores, more than 30,000 people who worked for the now-defunct toy store received no severance pay, according to Racked.

Although there is no legal obligation to do so, many companies in the United States offer severance pay to its employees in the event of a mass layoff, business conditions outside the employee’s control (such as reorganization), or reasons other than misconduct. Under the WARN (Worker Adjustment and Retraining Notification) Act, companies with 100 or more employees must give 60 days’ written notice in advance of a shutdown (in New York State, the timeframe is 90 days). In lieu of a notice, a company may compensate laid-off employees 60 days’ pay (90 days in New York).

The courts continue to recognize the rights of employees to severance in many situations, particularly when there is a massive layoff. Usually, a terminated employee will receive two to four weeks’ pay for each year worked, while middle managers and executives may receive more generous packages, according to Investopedia; in fact, executives may continue to receive severance for more than a year after the closing. If you are due severance pay after a layoff, you should negotiate with the company to obtain a better severance package than what you are being offered.

Each company is different when it comes to severance. Also, always remember that every firing is negotiable. If you are expected to receive severance pay after a mass layoff, and you still have not been paid, or if you have been denied severance pay after your employer has closed its doors, contact an experienced New York Employment Attorney who can help you receive the compensation you deserve.  Call Steven Mitchell Sack at (917) 371-8000 or email him at

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