Can an employer not pay severence if they have asked you to stay telling you that if you did you would be given severance?

UPDATED: Oct 1, 2022

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Can an employer not pay severence if they have asked you to stay telling you that if you did you would be given severance?

My company is going out of business and they have asked me to stay for another year while we wind down the company. They gave me a letter offering severance pay if I stay. Now I am hearing rumors that if the company is sold they will not pay the severance. Is this legal?

Asked on May 21, 2019 under Employment Labor Law, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If you have a severance agreement, legally, they have to honor that contract and pay you as per the terms of the agreement. Agreements and contracts are enforced as per their plain terms or language. What does the agreement state? Does it say that you will be paid when the company goes out of business, or on a certain date without qualification or limitation? If on a certain date, they have to pay you on that date. But it says you are paid when or after the company goes out of busienss, if it does not go out of business (e.g. it is sold to someone else and taken over), they would not have to pay you, since in that circumstance, the event triggering payment (going out of business) did not occur.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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