Subject to certain exceptions most employees are "at will" which means an employee can resign at any time and be terminated at any time. Sometimes when employment ceases, employers offer severance pay in exchange for employees giving up certain rights. An employer will rarely provide severance pay without a Severance Agreement, which requires the employee to waive certain legal rights. Those rights may have significant value and should not be waived without careful thought.
Negotiating a Severance Agreement
There are different ways that Severance Agreements come about:
- An employee is terminated and the employer offers a Severance Agreement.
- An employee has been terminated, no Severance Agreement was proposed but the employee approaches the employer seeking one.
- An employee wants to resign and seeks an employment lawyer to negotiate severance.
Just because a company offers a Severance Agreement does not mean that you should accept it. You may be waiving rights. For example, if you faced wrongful termination, you may have rights that are worth more than the Severance Agreement provides you for waiving them. Perhaps the Severance Agreement includes a non-compete provision, which would make it hard for you to find other work? Perhaps the Severance Agreement simply does not provide enough money.
It is always a good practice to have a lawyer review a proposed Severance Agreement in conjunction with a comprehensive consultation in which the entire circumstances surrounding your employment are discussed. The lawyer will want to talk to you about your work environment, your future employment aspirations, the reasons for your departure or termination, common pitfalls and claims you might be waiving.
We often consult with clients to fully advise employees of their rights and negotiate terms. Issues to be considered in a Settlement Agreement may include:
- Financial terms, tax consequences and timing of severance payments
- Continuation of employment benefits
- Rights to unemployment compensation
- Claims to be waived
- Re-employment possibilities
- Scope of Non-competition
- Preservation of trade secrets
- Applicable law
- Consequences of violating the Severance Agreement
The Older Workers Benefit Protection Act (OWBPA)
Companies seek to have employees waive rights in signing a severance agreement. In order to have the employee successfully waive age discrimination claims, a severance agreement must comply with the Older Workers Benefit Protection Act (OWBPA). This act requires that an employee get a minimum of 21 days to review the severance agreement before signing it and have at least seven days after signing it in which to revoke his signature. The OWBPA applies only to employees who are over 40.
Call us today at 267-470-4742 or contact us online to discuss your legal options.