Whether an employer is legally obligated to provide compensation to employees upon termination of employment varies significantly across the United States. This type of payment, beyond wages already earned, is not mandated by federal law and is generally a matter of company policy or individual employment contracts. For instance, a business might offer additional weeks of salary as part of a separation agreement.
The practice can serve several important purposes. It can ease the financial transition for displaced workers, assist in maintaining positive employer-employee relations, and potentially reduce the likelihood of legal disputes arising from terminations. Historically, such arrangements were more common in industries with strong union representation or in situations involving mass layoffs. These considerations reflect a growing awareness of the economic impacts of job loss.
