Severance Pay

[Doug Tyler]

What are some guidelines for severance pay? Either a household employee chooses to leave or is let go. I've heard conflicting information.

[Susan and Pat]

We had a contract and our employee was registered with Social Security. Two things, every 3 months they get extra in their paycheck for the extra month they get paid for. When a person leaves, they get money for that termination. We tried doing all of this ourselves and it became way too complicated and the risk of penalties for messing up is high. Also know that it is common for workers to go to the Labor Board with complaints - and many do. We ended up with a CPA to handle this, he puts the worker info into a computer program and it calculates out what is owed him. I do not know how else you can figure this out. I do know that it is very important that you have this piece of paper showing what wages and the termination pay that the person was due, and have them sign and date that they received their money.

Our CPA only speaks Spanish, our Panamanian friend helps us with these transactions. The necessary Spanish is beyond our skills right now.

If you have this person set up at Social Security, you can close out that person's account with you but DO NOT close out your account or you will need to redo the application process.

Hope this helps.  Let us know if you want the name of our CPA.