Losing your job is a stressful and difficult time in your life. Many employers will offer you a severance package when your employment ends. You should not sign any severance package until an employment attorney reviews the package with you first.
The severance package may seem fine to you, but there may be tricky clauses or other bad provisions in it that will work against you. All severance packages offer you money in exchange for signing a release in which you waive any claims you may have against the employer and its employees. If this doesn’t seem fair to you, you need to get your lawyer to review your severance documents, and if necessary, negotiate the severance package for you.
Reasons Your Need Your Lawyer to Read Your Severance Package
Your severance package is an agreement between you and your employer signed upon your termination. Your employer is going to set up a severance agreement that favors them, not you. You need to make sure there are no clauses that can hurt your ability to obtain money now and other employment in the future.
Generally, employers offer less money initially with the expectation that employees will negotiate up the severance amount. If the money offered to you seems too low, it likely is. Your employer is not interested in giving you a fair deal. The employer is going to try and get away with not paying you what you are worth.
You may not need to sign a severance agreement if you are already entitled to severance pay because of a contract or company policy. Again, severance agreements will contain the release and waiver the Company wants from you so you must carefully understand what you are giving up by signing the agreement.
The severance agreement will require you to waive and release all employment-related claims you may have against the employer and its employees. This means you agree not to sue the employer for anything that happened prior to the date you signed. Employers will often agree to release the employee from any claims the employer may have against the employee. However, employers rarely include the employee release in the first version of the severance agreement. The severance agreement may also limit any future claims to arbitration and not court. You must make sure you are comfortable with and understand this before you sign any agreement.
Non-Disparagement and References
Severance agreement often contain a non-disparagement provision that limits anything negative or disparaging you can say or write about the employer and its employees. These provisions apply to social media such as Facebook and Instagram so you must be careful. Again, employers will often agree to a non-disparagement provision for employees. This means your employer cannot say or write negative things about you. You also need to make sure the severance agreement describes how you receive a future employment reference. You may need this for your next job. The reference provision can set out exactly the reference the employer will provide or confirm that the employer will provide only the standard reference the employer provides for all other employees.
Your severance agreement needs to explain what benefits you will receive after you leave including health benefits and job placement assistance. Remember, everything including increased health care coverage is negotiable with the employer.
Get Everything You Are Owed
You need to make sure that any severance agreement includes payment for all items your employer owes you. For example, the agreement should require the employer to fully reimburse you for any outstanding business expenses, mileage, or any other cost you incurred as a result of your job. Likewise, the agreement should contain payment for any unused vacation time or possibly sick time.
Your employer will want to keep the contents of your severance package confidential so that you do not talk about it with other employees. You must understand that your severance is confidential. You may forfeit your severance benefits if you talk about your severance and the agreement prohibits you from talking.
Restrictive Covenants and Agreements Not to Solicit
Severance agreements may contain non-compete and non-solicit restrictions which prevent you from working certain jobs after you leave and hiring away other employees from the employer. These restrictions are very confusing, but they have a big impact on your ability to find a new job. You should have an employment attorney review any severance agreement that contains these provisions.
You should never trust your employer with a severance package. Always get a lawyer to review it first. Your lawyer can help you negotiate it with your employer to get you the best deal and make sure that your employer does not take advantage of you.
Contact us at Rowdy Meeks for a free case assessment and ask us whatever employment law questions you have.