Termination Pay Law
North Dakota’s termination pay law allows employers in the state to stop paying out unpaid time off (PTO). The amendment adds a fourth provision to the state’s severance pay law stipulating that, when an employee quits employment, an employer shall not be required to pay out PTO unless:
The fourth new provision of the employment law takes effect on January 1, 2021. According to this provision, when an employee quits employment, the employer shall not be required to compensate that employee for a period of up to sixty days. During this period, the employee may use that time to search for a new job. If the new provision of the employment law is being applied to an expired employee, the employee must wait for ninety days from the date of termination before using that time to seek a new job.
The fourth new provision does not apply to employees of agricultural establishments. Agricultural establishments are not covered by the termination pay law according to North Dakota state statutes. It is believed that this exception was included because the employees of agricultural establishments typically travel to their jobs. This exception could also apply to employees of a hotel, inn, or motel, but these employees do not typically travel to another state to go to work. In addition, the workers in these jobs may have been traveling between states for several months to get to their jobs. Therefore, they, too, are not covered by the new provisions of the employment law.
A New Provision in the Termination Pay Law
A fifth North Dakota provision does not apply to employees who have been employed through an employee share scheme. An employee share scheme is a plan that allows an employee (or his or her family members) to invest money in a business or organization, and then be given shares of profits that accrue according to the performance of the business or organization. However, the employment law does not require an employee to be a member of an employee share scheme in order to be entitled to benefits under the law. If an employee is being laid off from his or her job, the employer may be able to terminate the employment of that employee without providing any reason at all. If the business or organization’s profit margin drops for some reason, the employer has no obligation to compensate the employee for the entire loss of income.
The sixth and last new provision is the most important limitation of the termination pay law. According to North Dakota state statutes, the total amount of compensation from the date of termination of the employee’s employment does not exceed one thousand five hundred dollars. Therefore, if the employee received a one thousand and five hundred dollar bonus on the date of his or her termination, he or she may not receive more than one thousand and five hundred dollars as compensation from the date of his or her termination. An employee may only receive this much compensation from the date of his or her termination. This makes the North Dakota exit compensation law a lot stricter than many other states’ exit compensation laws.
Like many other states, the District of Columbia has its own exit compensation law. Unlike in North Dakota, however, this exit law only permits the employer to deduct expenses from an employee’s tax-free lump sum that was gained through termination. In addition, it only allows employers who have reached certain pension age to deduct these expenses. An employee who retires from the military or the armed forces after the completion of his or her active duty service is not qualified for this tax deduction. An employee may only receive up to one thousand dollars as compensation from the date of his or her retirement.