Severance Agreements

Often, an employer which fires or lays off an employee will offer a severance agreement. These agreements generally have one overriding goal – that is, to enable the employer to avoid a law suit for discriminating, retaliating or other wrongdoing in terminating your employment.

Nearly all severance agreements have several points in common. First and foremost, these include an agreement to pay an amount of money to the employee in exchange for an agreement never to sue the company for any matters arising out of the employees’ employment. The amount of money that is agreed upon is usually expressed as a specific number of weeks of employment. The agreements also typically include a confidentiality provision and a non-disparagement provision. The confidentiality provision usually means you cannot talk about the severance agreement and its contents with anybody. The non-disparagement provision typically means that you cannot say anything bad about the employer to anyone.

If you’re over 40 years old, severance agreements also usually contain additional language because of the Older Worker Benefit Protection Act (“OWBPA”). This causes employers to ask you to waive your right to a claim under the Age Discrimination in Employment Act (“ADEA”). To do this employers specifically reference ADEA claims; they indicate that the employee has been advised, in writing, to consult an attorney prior to signing the document; the employee is given a waiting period of 21 days to review and think about the agreement (this would typically include a severance or settlement agreement), and 7 days to revoke acceptance of the agreement even after it is signed. Employers do not include this language because they are being nice, but rather, they include it because the law requires them to if they want you to waive an age discrimination claim.

There are two important things to remember about severance agreements:

  1. you don’t have to accept them; and
  2. you can negotiate them and try to get your employer to give you more money or other consideration in exchange for signing it.

We can help consult, negotiate and improve severance agreements. We have frequently counseled and represented clients who have been approached with a severance agreement. We are often able to negotiate a larger payment to you, the employee. This is because you very well have a good case that the employer wants to avoid litigating. Other things we can negotiate are a change in your termination status to make it voluntary instead of involuntary (in other words, to state that you quit your job and were not fired) and an agreement by the employer to give you a good reference for your job search. We can also advise whether it is a good idea to accept the terms of the severance agreement or forego it and file a case either with an administrative agency and/or in court. The advice we give in these circumstances is case specific. This means that every case is different depending on the facts of the termination and the employees’ willingness to not accept the severance agreement and file a lawsuit. The risks and benefits of all options would be examined.

Contact us to discuss your severance agreement. We will speak to you initially for no charge.