Severance Agreements - Ending an Employment Relationship Appropriately with Sound Legal Advice


Many employers using severance agreements to limit litigation risk and to assist employees with a transition to another position. When you are terminated - whether involuntarily, as part of a reduction-in-force or organizational restructuring - and presented with a severance agreement to review and sign, it's important to consider your legal options promptly. While negotiating a severance agreement can feel like a daunting task, especially when you're already dealing with the emotions and stresses of a job loss or a layoff, there are certain key steps that all employees should follow, which includes seeking representation from a skilled lawyer who is familiar with employment laws.

In simple terms, a severance agreement is a legal document that outlines the terms and conditions of your departure as an employee from a company. It typically includes severance pay and other terms in exchange for your agreement to waive and release your employer from any and all claims. Often, these agreements contain overbroad and draconian clauses, such as noncompete obligations, non-disclosure requirements and confidentiality clauses. Many of these clauses are drafted in a way that is illegal. In addition, these agreements typically do not release you from any obligations you have to your employer under any other agreements you've signed, and do not include a mutual release and waiver of claims. So, it's very important to review all of the agreements you have in place to understand your legal obligations to your employer.

Every state or country may have different employment laws that impact the terms of severance. In addition, employer policies also can impact your entitlement to severance pay. Severance pay can also have an impact on your receipt of unemployment benefits, and many agreements are drafted in a manner to attempt to deny you right to obtain unemployment benefits following your termination of employment. Therefore, before you sign any severance agreement with your employer, it’s a good idea to review the relevant laws or consult with a lawyer to better understand your rights.

There are numerous things that you should consider when evaluating the severance offer, including:

  • Is the severance pay sufficient to cover your financial needs during your job search?

  • Does the agreement offer continuation of health benefits, and for how long?

  • Are there any non-compete or non-disclosure or other restrictive covenants that could limit your job search or future opportunities?

  • Have you been paid all compensation you are entitled to under the law or your employer's policies, including accrued paid time off?

  • Does the agreement include a neutral or positive employment reference or other support to help you secure a new job?

  • Does the agreement include a mutual release of claims?

  • Do you have potential legal claims against your employer and, if so, how strong are the claims?

  • Can you increase the amount of severance offered to you through negotiation and, if so, what is the best way to negotiate additional severance?

  • Do you need to negotiate other changes to the terms of the agreement in addition to the amount of severance paid to you?

These questions and many others are very important questions to ask before you decide what to do when presented with an offer of severance. Experienced employment counsel can provide you with advice and guidance concerning these issues.

Negotiating a severance agreement can be a challenging yet rewarding process. By preparing thoroughly, understanding your legal rights, engaging competent legal counsel and approaching the negotiation with confidence, you can secure a deal that provides the support you need during this transitional period and that protects your legal rights - not just your employer's rights. With the right preparation, you can ensure that your severance package reflects both your contributions to the company and your future career goals.

For assistance with reviewing your severance agreement, discussing your options, negotiating additional severance or different terms, or rejecting the offer and pursuing legal claims against your employer, contact the employment lawyers at Stavros Law for assistance. We can provide the direction and guidance you need to secure your future and protect your legal rights.

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