Separation Pay

Depending upon years of service, our laid off employees are eligible for separation pay up to a maximum of 12 weeks. According to the information I have on the Texas payday laws, an individual who is discharged must be paid all "wages" within six days of termination. Does "discharge" include layoff, and if so, does the law allow the payout of seperation pay on normal paydays until the eligible amount is exhausted rather than a lump sum payout within six days?


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  • That's a good question. I looked at the payday law and found that "Wages" includes severance that is paid under a written agreement or a written policy. So it appears that if your company policy calls for severance pay, it should be paid in 6 days. A lay off would normally be a discharge under the law. I did not find any exception in the Texas law for severence.

    You need to make sure, if the severance is conditioned on the employee signing a release, that you allow the employee to have the statutory waiting time for revocation under the Age Discrimination in Employment Act. This time is longer than that allowed under the payday law, but if the employee is releasing all claims, and the waiting period is covered by federal law, I do not think he or she would have a valid payday claim.

    Hope this helps.

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