Severance and Separation Agreements: Navigating Your Employment Exit
At King & Siegel LLP, we understand the complexities and challenges that arise when negotiating a severance or separation agreement. Though you can negotiate a severance agreement without a skilled severance agreement attorney, these agreements can significantly impact your rights. Because of this, it is essential that you contact an attorney as soon as possible to help understand your rights and options. Once you sign away your rights, it may not be possible to bring a claim against your employer. You also lose any leverage you had toward negotiating a larger separation package.
What is a Severance or Separation Agreement?
A severance or separation agreement is a legally binding document outlining the terms and conditions under which an employee leaves their job. It typically includes details regarding compensation, benefits, confidentiality clauses, non-disparagement agreements, and more. Understanding the intricacies of these agreements is vital to protecting your rights and future career prospects. A severance agreement attorney can help you understand the boilerplate legalese that typically populates these agreements.
The following are standard terms that are often included in severance agreements:
- Severance pay: One fundamental element is the provision for severance pay, where the agreement specifies the amount an employee will receive upon termination. This can be a fixed amount or calculated based on factors like length of service, position, or salary.
- Release of claims: One critical component is the release of claims clause, wherein the departing employee agrees not to sue the employer for any potential legal claims arising from their employment. This protects the employer from future litigation and provides closure for both parties.
- Confidentiality: To protect sensitive company information, a confidentiality clause is often included. This section prohibits the departing employee from disclosing proprietary details, trade secrets, or any confidential information about the company.
- Non-disparagement: Employers may include a non-disparagement clause, which restricts both parties from making negative or harmful statements about each other. This ensures a more amicable parting and protects the reputation of both the employee and the company.
- Continuation of benefits: Addressing the transition period, a severance agreement may outline the continuation of certain benefits, such as health insurance or retirement contributions, for a specific period after termination.
- Return of company property: To ensure a smooth exit, agreements often include a clause requiring the returning of company property, ranging from laptops and access cards to proprietary documents, upon departure.
When am I Entitled to a Severance Agreement?
Employers aren’t always required to provide severance packages. However, certain situations may warrant a severance agreement, such as:
- Employment Contracts: If your employment contract specifies severance terms upon termination.
- Company Policies: Some companies have policies or practices that entitle employees to severance under certain circumstances.
- Mass Layoffs or Restructuring: In cases of layoffs or company-wide restructuring, you may be entitled to a severance package under state or federal law.
- Constructive Dismissal: If you’re forced to resign due to intolerable working conditions, you may negotiate for a severance agreement.
Q&A Regarding Severance Agreements
If My Employer Offers a Severance, Does it Mean They Acknowledge Liability?
Not necessarily. Employers may offer severance packages for various reasons, including avoiding potential legal disputes, maintaining a positive employer brand, or as part of a standard procedure. Accepting a severance package doesn’t necessarily imply admission of fault or liability on the employer’s part.
Sometimes, however, a company will offer a severance package with the express goal of inducing an employee to waive valid, valuable claims. This is why it is essential that you review a proposed severance with an attorney.
How Can I Negotiate for a More Favorable Severance Agreement?
Negotiating a severance agreement can be a complex process. Here are some steps to consider:
- Understand the Terms: Review the agreement thoroughly. Seek legal advice to comprehend the terms and implications.
- Identify Priorities: Determine what aspects of the agreement are most important to you, whether it’s financial compensation, benefits continuation, or a positive reference.
- Counteroffer: Propose amendments or counteroffers. Experienced legal representation can assist in negotiating better terms.
- Consider Legal Ramifications: Ensure the agreement doesn’t limit your ability to pursue legal action if necessary. It’s crucial to protect your rights moving forward.
You will want to understand whether you have valuable legal claims that you are waiving in connection with the severance agreement. For instance, if you have strong claims for age discrimination, you may have more leverage in negotiating for a favorable outcome.
Why is There a List of Positions & Ages in My Severance Agreement?
The Older Workers Benefit Protection Act (OWBPA) requires certain disclosures in connection with layoffs affecting workers who are over 40. This law is intended to allow workers to determine if age discrimination may have played a role in the mass layoff. The OWBPA was passed because Congress acknowledged that mass layoffs were often used to conceal age discrimination, and older workers were often disproportionally affected.
As a result, the OWBPA requires employers to provide affected employees with a list of positions in the “decisional unit,” i.e., the group considered for termination, along with the corresponding ages of each employee. If you are over 40, you should always review the OWBPA disclosure before agreeing to waive your rights in a severance agreement.
Contact Us for Guidance and Support
Navigating severance and separation agreements requires expertise and legal insight. At King & Siegel LLP, our experienced employment attorneys are here to guide you through this process. Whether you’re reviewing an offer or negotiating terms, we provide personalized assistance tailored to your needs.
Contact us today for a free consultation to discuss your situation. Let us help you secure a favorable outcome and protect your rights during this critical time.
At King & Siegel LLP, we advocate for fair and just severance agreements. Trust us to stand by your side and protect your interests.