Delaware Termination of Employment
All wages earned and unpaid at the time of discharge are due and payable upon the termination of employment and must be paid at the next regular pay date.
Severance Agreements / Releases
Generally, employers are not required to provide severance pay unless they have agreed to do so. If the employer wants to offer severance to an employee, the employer may ask the employee to sign a release in exchange for the severance, in which the employee waives all legal claims the employee may have against the employer. If an employer seeks a release, the employee must be provided severance or other consideration in addition to any payments the employee was already entitled to receive. Federal law contains specific statutory requirements for waivers of age discrimination claims and prohibits the waiver of certain wage claims.
With respect to the settlement of claims, there are special rules in Delaware that apply to the release of certain claims. For instance, it is a violation for an employer to request or require that an employee waive his rights in connection with hazardous chemicals as a condition of employment or waive his rights to unemployment or workers’ compensation benefits.
Unemployment Insurance / Compensation
The purpose of unemployment compensation is to provide benefits to those who are unemployed through no fault of their own. Therefore, to be eligible for payments, an applicant generally must either (1) have quit for good cause attributable to his or her employer or (2) have been terminated for reasons other than serious misconduct connected with his or her work. The weekly benefit amount the employee will be paid depends on the amount he or she was paid during the base period (the first four of the last five completed calendar quarters) while working for the employer. If an employee is receiving unemployment insurance benefits, he or she must (1) be able to work and available to work during the entire period of benefits, (2) make an active search for work, (3) register to work with the Division of Employment and Training when required to do so, (4) accept suitable work as defined by law, (5) file a weekly claim for benefits properly and on time, and (6) report to the local unemployment insurance office when required to do so. An employee must report all wages, including self-employment and odd jobs, pensions, annuities, holiday pay, vacation pay, severance pay, and bonuses and special payments.
Unemployment benefits come from taxes paid by employers on wages of their workers. These taxes are put in a special trust fund that is used solely to pay unemployment benefits to workers who lose their jobs through no fault of their own. The benefits are intended to be temporary to help people with basic needs while seeking new employment.
The tax an employer pays depends on the size of the employer’s taxable payroll, the employer’s unemployment insurance tax rate, and taxable wage base. The taxable wage base is $10,500.00 and the minimum and maximum tax rates are .3% and 8.2%, respectively.
An individual is “unemployed” in any week during which he or she performs no services with respect to which no wages are payable to him or her, or in any week of less than full-time work if the wages payable to him or her with respect to such week are less than his or her weekly benefit amount plus whichever is the greater of $10.00 or 50% of his or her weekly benefit amount.
Health Care Continuation (COBRA) Requirements
The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) requires employers who provide employee health and medical benefits to provide notification to employees of their COBRA rights at the time of a “qualifying event” such as a resignation or an involuntary termination of employment. COBRA applies to employers with more than 20 employees. See the “Federal Laws Regarding Employment” section below.