Severance arrangements provide employers with an effective tool to attract and retain talented employees and/or to satisfy a paternalistic need to protect employees from unforced but involuntary terminations. Despite the mutual benefits that they provide to both employers and employees, they are fraught with potential legal compliance traps and pitfalls. At the August meeting, we will identify and address many of the issues associated with severance plans and arrangements so that you are better able to avoid those traps and pitfalls, including but not limited to:
* Are severance plans subject to ERISA? If so, are they welfare or pension plans?
* If ERISA applies, how do ERISA's reporting, disclosure and claims procedure rules impact severance plan administration?
* If health plan continuation is offered, how are the employer's COBRA obligations impacted? Under what circumstances does continuation of health coverage discriminate against highly compensated individuals?
* Do the Code's Section 409A rules apply to severance plans?
* Is severance pay subject to income and employment tax withholding?
* What releases can employer obtain as part of the severance agreement?
Ashley Gillihan is a member of Alston & Bird’s Employee Benefits and Executive Compensation Group. He is also a secondary member of the firm’s ERISA Litigation Group.
Middle Tennessee Employee Benefits Council, Inc. P.O. Box 24686Nashville, TN 37202-4686Middle Tennessee Employee Benefits Council is a 501(c)3 non-profit organization.