Hidden Liability When Firing an Employee
Most employment dissolutions taking place in small to large businesses are done so with amicable intentions. Of course employees are generally and understandably upset, but the break-up of employee and employer is usually beneficial, in the long run, to both parties. Severed employees must come to grips that personalities clashed enough to produce an unhealthy work environment or alternatively, the business was ill-prepared or lacked the resources necessary to provide a successful future for that employee. Either way, the past must eventually be accepted so that the severed employee can emotionally and psychologically move forward, move on to the next phase of life. As a token of good will and possible liability relief, conscientious employers will provide a comprehensive severance package at the moment of termination to help the newly unemployed through the seemingly difficult transition.
American business severance agreements frequently include, but are not limited to the following: additional income in regularly scheduled terms of months or years, payment for unused vacation time or sick leave, stock options, retirement benefits and limited continuation of life, dental, medical and disability insurances. The purpose of this communication is to address the employer’s contractual promise of disability insurance.
Employee benefits are financially imperative to millions of Americans. Most have become economically dependent upon employer-sponsored insurances that not only serve to protect the covered employee, but may reach to protect that employee’s immediate family as well. Often taken for granted by those the programs benefit, the corporate expense of maintaining such employee benefits can be fiscally straining to any company, no matter the size. But as previously mentioned, dutiful employers may extend coverage through a severance arrangement. And therein lies the problem.
Group insurance carriers require the immediate removal of a severed employee from an employer-sponsored plan with the possible offer of conversion to individual coverage. Family or individual life, dental and medical insurance policies are readily available throughout the country from any number of insurance companies. Disability coverage is the exception. Without future employment contracts in place, traditional disability carriers will not insure an unemployed person no matter how recently that person was terminated. Since most employers and severance agreement drafters are unaware of this dilemma, they frequently open themselves to great liability risks and threat of lawsuit.
Petersen International is able to assist employers, your clients, in mitigating such liability and avoiding the unnecessary and potentially expensive need for self-insurance. The Petersen International Severance Disability Insurance Plan provides a recently severed employee with long term monthly and lump sum disability benefits which can be sculpted to fit the requirements of any legal severance agreement.
It’s quite uncomfortable to contemplate loss of employment or the firing of an employee during the holidays, but the truth is that these things happen at any time of year. Contact us for more information about pitching this product to your business-owner clientele.