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

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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

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 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.


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