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Comment by lotsofpulp | Hacker News Reader

Unless there is a contract with the employee, such as a collective bargaining agreement with a union, there is no legal reason a business has to pay an employee severance in the US.

A business might pay an employee severance for morale purposes, good PR, and/or to entice the employee to sign agreements that reduce the business's future liabilities.

If an employee agrees to quit their job in exchange for severance money, this would result in lower unemployment insurance premiums (i.e. tax liability) for the business because the employee would not be eligible for unemployment benefits from the government. The more unemployment benefits former employees receive, the higher the unemployment insurance premiums for the business.

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My understanding, which could be wrong, is that in a lot of cases severance is offered on condition you won't fight the termination or take legal action.

So it is in part a CYA from the companies side.

Yes, that is what I meant in:

> and/or to entice the employee to sign agreements that reduce the business's future liabilities.

> Unless there is a contract with the employee, such as a collective bargaining agreement with a union, there is no legal reason a business has to pay an employee severance in the US.

Who on Earth is working without an employment contract?

A lot of W-2 jobs are simple pay per hour or per year, nothing more. There is not even a need for HR, there are no benefits, just a small business where the owner might run everything.

Even if you do have benefits, I doubt the local hotel/restaurant/spa/doctors office/etc is going through a formal layoff process with severance. Probably not even all the outsourcing companies that Apple/Microsoft/Meta/etc use for tech support and whatnot.

I have no idea what a "W-2 job" is. In my country, and most countries, it doesn't matter if you're paid by the hour, by the "year" (what?), salaried etc. Virtually every employee has an employment contract, and every employee without an explicit employment contract (which is illegal) has an implied employment contract.

In the US, a W-2 job means one where you are classified as an employee, which means various labor regulations apply in your relationship with your employer. But even then, everywhere except the state of Montana has the concept of "at-will" employment, meaning absent an explicit contract that says otherwise, an employer or an employee can sever the relationship whenever they want.

So if you are an employee and the manager wants to reduce labor costs, they can simply terminate employees, and the employees would have to apply for unemployment benefits from the state government.

An example of a non W-2 job is when a business sells their services to another business, even if the business is just 1 person. Such as a business hiring a painter who works by and for themselves. There would be no labor regulations involved here because the painter is not an employee.

W-2 is the federal tax form a business gives to employees stating the taxable income and other information for the year, and 1099 is the federal tax form a business gives to vendors stating the taxable income for the year.

In the US, implied employment contracts are "at-will". This means the employer may fire an employee for any reason (except reasons that explicitly break a law, like firing a black employee for being black). Likewise, an employee can quit at any time, with no recourse for the employer (2-weeks notice is a custom, not a contractual obligation under at-will employment).

Just to be clear we don't have indentured servitude or forced labour in my country either. Employees can quit any time they like, even with employment contracts. A contract cannot force anyone to work, under any conditions. Even with a contracted notice period an employee can walk away at any moment. They would be in breach of their employment agreement but there's very little recourse on the employers side. The employee must be paid for any work they have performed, no exceptions.

The employer may sue for damages in the case an employee does not complete their notice period, but they cannot force them to work it. And the employer would need to demonstrate damages.

But an employer cannot just dump an employee who has an employment contract (implied or explicit).

> The employer may sue for damages in the case an employee does not complete their notice period, but they cannot force them to work it. And the employer would need to demonstrate damages.

Not completing your notice period opening you up to a lawsuit sounds like essentially forcing you to work.

In America, it is exceptionally rare to hold someone liable for quitting their job, even if there are damages. Like, if I work the opening weekday shift at a small store, and decide to quit with zero notice, and now there's nobody available to open the store the next day, it's not my problem. Even though the owner could demonstrate the damages of lost sales an during those hours, there's literally nothing they can do.

At a larger corporation, even if my departure causes some major project to fall behind schedule, it's not my problem. Software engineers can quit with zero notice and be completely immune to any legal ramifications.

I just want to throw out that "paid by the year" has not been a common thing in my American experience. I've never heard of anyone with that.

Unless they are talking about a yearly salary.

Yes, I meant yearly salary.

In the US we have exempt and non-exempt employees. Non-exempt have more protections and have to be paid hourly and twice a month. They have to be paid overtime rates. There are other legal protections. Big one is the government will take direct action against employees that break labor laws against exempt employees. Where for non-exempt it mostly a civil matter.

Exempt employees are generally managers, engineers, that perform complex autonomous decision based work. Typically they are paid a monthly salary. But they don't have to be. I'm exempt and get paid hourly, every two weeks and I in theory get overtime.

I have never heard of non exempt employees having more protections or having to be paid twice a month, in any US jurisdiction. Can you provide an example?

I have only ever heard of non exempt and exempt to simply distinguish employees that are owed overtime after 40 hours per week and employees that are not owed overtime after 40 hours per week.

There is no federal law about pay frequency, but pretty much all states require at least monthly, if not semi monthly or biweekly, regardless of exempt or non exempt nature of employee.

https://www.patriotsoftware.com/blog/payroll/pay-frequency-r...

Americans!

There's a difference between legal reasons and decency

Sure, but note that anyone who does not work for government or big or well funded businesses is not going to get severance when they are laid off or terminated. Which is probably half of the US or maybe even more. All the franchised restaurants/hotels, most retail, smaller construction contractors, etc.

It is mostly a benefit for those earning more than median incomes.

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