What Should We Consider When Providing a Separation Package To Terminated Employees in the State of Arizona?

HR Pulse

November 15, 2023

Discover key considerations for severance agreements in Arizona and learn why consulting legal professionals is crucial in navigating complex labor laws.

It is important to consult the most recent and specific legal information or seek advice from a legal professional due to the ever-evolving nature of labor and employment laws. In general, Arizona is an "at-will" employment state, meaning that either the employer or the employee can terminate the employment relationship at any time and for any reason, unless a contract specifies otherwise. However, some common considerations for severance agreements may include:

No Legal Requirement: Arizona law typically does not require employers to provide severance pay.

Employer Discretion: If an employer chooses to offer severance pay, it is usually at their discretion, and the terms are outlined in the severance agreement.

Monetary Pay: Many employers pay either a lump sum or a distribution over a number of weeks. Depending on the size of the business, one common formula is to offer one or two weeks of salary for every service year of employment usually with a minimum of four to eight week's worth of equivalent pay.

Release of Claims: Employers often include a provision in severance agreements requiring the employee to release the company from any legal claims in exchange for receiving severance benefits.

Consultation with Legal Counsel: Employees are often encouraged to seek legal advice before signing a severance agreement. Employees are given 21 days to review and consider the severance offer and 7 days period to rescind after signing the agreement.

Age Discrimination and Employment Act (ADEA): If the employee is 40 years old or older, the Older Workers Benefit Protection Act (OWBPA) may apply. This federal law sets specific requirements for a valid waiver of age discrimination claims.

To get the most accurate and up-to-date information on severance agreement guidelines in Arizona, it is advisable to consult with an employment attorney or check with the Arizona Department of Labor or a similar authoritative source. Additionally, reviewing recent legal updates or contacting the Arizona Industrial Commission could provide relevant information.