A. Employers do not have a legal obligation to pay severance. The fired employee presented with a severance package needs to assess whether the money being offered is worth accepting in exchange for giving up your potential claims. The average employee would probably need to consult counsel to determine whether they had a claim and its likely worth compared to the severance package being offered.
Q. If your case does go to trial, how much can you win in damages?
A. That depends on the law the suit is based on. In an implied contract claim, punitive damages--those designed to punish and deter similar treatment in the future--are not available to you regardless of the outrageousness of the employer's conduct. You can get all out-of-pocket losses--lost wages and lost benefits plus any catastrophic losses which flowed from the termination. For example, an employee out of work might lose his home because he can't make the mortgage payments. Emotional distress damages can also be pursued if such distress foreseeably resulted from the termination. Under the Fair Employment and Housing Act, you can get everything I just described plus punitive damages and attorney's fees. So if a person was sexually harassed at work and brought a claim under the FEHA, the remedies are potentially much greater than someone whose contract was breached.