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Maryland employers are often faced with the question: When employees are terminated, laid off or resign from my company, should I pay them severance? There are several factors to consider. Even though Maryland employment law generally does not require you to pay severance, you may unwittingly create your own obligation to do so if you develop a consistent pattern or practice of paying severance to departing employees. If that happens, an employee whom you don’t want to pay severance might sue you claiming that you are obligated to pay, just like you paid all previous terminated, laid off or resigned employees.
To avoid this unwelcome, obligatory severance-pay trap, an employer should consider paying severance only to its very good employees, as well as to very problematic employees. The good employees – to reward them for their service and loyalty. The problematic employees – to get them to sign a severance agreement that has a release of claims and perhaps a non-compete clause. It may also be worth the extra investment for an employer to protect itself from expensive legal challenges from a litigious employee down the road.
If you have questions about the legal aspects of managing your employees, call the Maryland employment lawyers at Luchansky Millman. We understand what you legally can do – and will help you decide what you should do – in managing your employees.