Employers often offer severance payments to employees who are terminated or laid off. The payments usually come with strings attached; mainly, that employees must give up all rights to sue the employer for any claims that they may have. Employees may be required to sign lengthy severance agreements with complicated terms and conditions to receive their payment.
If you are provided with a severance agreement, you must think carefully before signing it. You are well-advised to consult with an experienced employment lawyer to help make an informed decision. A lawyer can help you understand the legal rights you are giving up. They can explain what your legal obligations are. Finally, a lawyer may also be able to help you negotiate for more money or better terms.
- A lawyer can help you understand the legal rights you are giving up.
- A lawyer can help you understanding the obligations you are taking on.
Employers use such severance agreements as a way to mitigate risk. Almost all severance agreements require employees to give up their right to sue their employer. Employers understand that in exchange for some fixed amount of money, they are buying the security that those employees will not be able to turn around and sue them at a later date.
You must make a careful assessment of whether you have legal claims that may be worth pursuing. Were you paid all of the wages, including overtime, due to you? Were you harassed or discriminated against at work? Were you denied a reasonable accommodation or leave rights? Do you believe you were wrongfully terminated or selected for layoff? Are there other claims you may have? Sometimes, these claims are worth far more than the severance amount being offered to you.
By meeting with an attorney, you can discuss the merits of your potential claims and whether it is worth rejecting the severance offered to pursue them. The decision about whether to accept a severance agreement may not be an easy one, but a thorough discussion of the pros and cons can help you make the right decision.
Most severance agreements impose obligations on the employee, so it is critical that you understand what they are. If you do not hold up your end of the bargain, the employer may be able to claw back some or all of the severance amount–or more. They may even able to go after you for their attorney’s fees if they prove you violated the agreement.
Many of terms can be confusing. Here are some examples:
- Confidentiality. Most agreements require some amount of confidentiality. Some do not allow you to discuss the fact that you received a severance payment. Others restrict what you can discuss even further, including any potential claims you may have had against the company. If you do not understand your obligations and fail to keep the information confidential, you may be required to pay back some of the severance amount. As a cautionary tale, consider the case of the private school headmaster who had received an $80,000 settlement but was forced to pay it back after his daughter made a comment on Facebook about it.
- Non-disparagement. Many agreements limit your ability to say negative things about your employer, so your speech may be restricted by the agreement.
- Limitations on post-termination conduct. Many agreements require a promise that you will not solicit employees or customers or use information that you have obtained from your employment with the company. It is important that you understand what these restrictions are so that you do not run afoul of them.
With a lawyer’s help, you may be able to negotiate for more money or better terms. An employer may be willing to put more money on the table than what they’re currently offering, especially if you have significant legal claims. In addition, you may be able to get the employer to agree to better terms. For example, is the agreement mutual in its terms or are many of the obligations one-sided? Does the agreement provide for a job reference?
Some people try to negotiate directly for a higher severance amount. However, I do not recommend doing so unless you are only looking for a modest increase in what has been offered. The reason is simple: lawyers can add value by framing/explaining your legal claims and by showing the employer that you are serious about pursuing them.
While it is appealing to accept a severance payment offered to you when you have been let go from a job, you should always make an informed decision before signing such an agreement.