In Maryland, job security can change in an instant—whether you’re working for a government agency in Annapolis, a hospital in Prince George’s County, or a startup in Baltimore.
If you’ve recently been laid off or suspect it’s coming soon, you may be wondering what kind of financial cushion you can expect. Maryland severance pay laws don’t always provide clear answers, but understanding the basics can help protect your future.
What Is Severance Pay?
Severance pay refers to the compensation and benefits an employer may offer an employee after termination.
Unlike a final paycheck, which includes compensation for hours already worked, Maryland does not legally require severance payments. Instead, employers may offer it as a goodwill gesture or in exchange for a legal release.
A few situations may create an obligation for an employer to provide severance pay, such as:
- If a severance agreement is part of an employment contract or company policy,
- If severance is offered as part of a union agreement, or
- If the employer has a pattern of paying severance and creates an expectation.
If none of these situations apply, an employer is not obligated to offer severance. However, many still choose to do so to reduce the risk of litigation or to maintain goodwill with employees.
What to Look for in a Severance Package
If an employer offers you a severance agreement, it is essential to understand what you’re signing. Severance packages vary depending on the employer, the industry, and your individual circumstances. At a minimum, a reasonable package should clearly outline how the severance was calculated and what you receive in return.
Standard severance package components may include:
- Severance pay—often calculated using a formula based on your salary and length of service;
- Continuation of benefits—such as health, life, or disability insurance, sometimes with employer-paid COBRA coverage for a set period;
- Outplacement services—career support to help you find new employment;
- A neutral or positive reference letter—to support future job searches; and
- A general release of legal claims—a document that typically waives your right to sue the employer in exchange for the severance.
Many employers also include non-compete or non-disparagement clauses, which may restrict your actions post-termination. A Maryland employment lawyer can help you assess whether the package is fair, identify potential red flags, and negotiate stronger terms on your behalf.
What Legal Rights Do Employees Have?
If your employer offers you a severance pay agreement, you have the right to:
- Review the agreement before signing it;
- Consult an attorney to understand the agreement’s legal implications;
- Negotiate the terms of the agreement; and
- Take up to 21 days to review the agreement if you are over 40.
A severance agreement is a legal contract. Signing means you agree to its terms, often including waiving your right to sue the employer. However, your employer cannot force you to waive certain rights, such as filing a charge against the employer with the Equal Employment Opportunity Commission (EEOC). Read the agreement carefully and negotiate where needed.
Does Severance Pay Impact Unemployment Benefits in Maryland?
You may wonder if you can still receive unemployment benefits if you accept severance pay. The answer depends on the structure of your severance. Lump sum severance payments typically do not affect unemployment benefits. However, if your employer allocates the severance pay over a period of time, it may delay or reduce your eligibility for benefits.
In addition, signing a release form stating you resigned voluntarily can disqualify you from receiving unemployment benefits.
Each case is different. That’s why it’s essential to carefully review all severance documents and seek legal advice before signing.
What Can You Negotiate in a Severance Agreement?
It might be tempting to sign a severance agreement quickly, especially when money is involved. But taking the time to negotiate can significantly impact your future.
Before you sign anything, reflect on your needs and goals. These tips can help you approach the conversation with confidence:
- Get legal advice. An attorney can help you understand what rights you may be giving up, suggest what to negotiate, and negotiate on your behalf.
- Know your value. Consider your years of service, performance, and contributions when evaluating the offer.
- Stay professional. Maintain a calm and cooperative tone during discussions.
- Ask for time. You can request more time to review the agreement.
Key elements that are often open to negotiation include:
- Length and amount of severance pay. This should reflect your years of service and position within the company.
- Health insurance continuation. Employers may agree to pay for some or all of your COBRA coverage for a limited time, reducing your financial burden during a transition.
- Reference language. You can request a neutral or positive reference letter to support future job applications.
- Non-compete clause. These clauses can be limiting, so consider negotiating the scope or timeframe if it’s too restrictive.
- Return of company property. The agreement should clearly state what items must be returned and confirm receipt, avoiding future disputes.
A thoughtful negotiation strategy can provide both financial and emotional security.
How Smithey Law Group Can Help
Navigating a severance agreement can be overwhelming. It often involves complex legal language, unfamiliar financial and employment terms, and significant consequences for your future rights and benefits. You may also experience pressure from your employer. But you don’t have to go through it alone.
At Smithey Law Group, we focus on employment and labor law. With extensive experience, our attorneys have helped countless employees and employers throughout Maryland resolve complex severance matters. Founding attorney Joyce E. Smithey has been recognized in Best Lawyers in America and Super Lawyers and frequently speaks on employment law topics throughout the state.
We take a compassionate, client-centered approach to every case and fight for outcomes that protect your rights and your future. Whether you are facing a layoff or preparing to offer severance, we can guide you through every step of the process.
Contact Us Today
If you have questions about severance pay or are facing a termination, don’t wait. The sooner you understand your rights under Maryland severance pay laws, the better prepared you’ll be. Contact Smithey Law Group today to schedule a confidential consultation.
