If my position is getting terminated company wide and I refuse to step down, do I get a severance when I lose my job?

UPDATED: Oct 1, 2022

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If my position is getting terminated company wide and I refuse to step down, do I get a severance when I lose my job?

I’m currently at a assistant managerial type position. According to news passed down but never told to me directly on June 1st, they will be terminating my position. It was told to managers that people in my position could apply to be ASMs which would be a step up or they would be automatically demoted to a sales rep position. If the company doesn’t inform me directly ahead of time of these changes and just demotes me and lowers my pay rate, can I refuse and get paid out a severance package or if they do notify me, how long must I be notified to not pursue legal action?

Asked on April 27, 2019 under Employment Labor Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

There is no legal right to severance: the law does not require it. Your position can be terminated without any compensation. You are only entitled to severance if either the company voluntarily chooses to offer it to you (including possibly in return for you signing a Separation and Release or confidentiality/non-disclosure agreement) or if you have a written contract which, by its plain terms, guarantees you severance. 
If they demote you to a low-enough position (e.g. a significant-enough pay cut; generally 1/3 or more), you may be able to quit but still get unemployment, under the theory you were "constructively" (or effectively) terminated by being given a pay cut that no reasonable person would stand for. Be advised that there is no hard-and-fast rule about this: it is a subjective determination, which means that you cannot count 100% on the unemployment office/labor department agreeing that what happened was bad enough to constitute constructive termination. If you go this route, there is a chance you will not be unemployment eligible.

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