A severance agreement often describes the manner of job termination, including the compensation that is to be offered to the employee. There is no requirement that an employer offer a severance agreement. The benefit to the employee is that they are getting some compensation, while trying to find a new job, and the benefit to the employer is that the employee is usually signing away their right to sue for wrongful actions – that occurred while they were employed.
Our office receives numerous calls from individuals wanting last second advice as to whether or not they should sign their severance offer. As with most legal questions there is no fast and easy answer for every severance situation. Each employment dispute, termination, and severance offer is fact specific. However, there are some general considerations that everyone should think about when deciding whether or not to sign a severance offer.
- Finality: The vast majority of severance agreements offered by employers require the employee to sign away their rights to future litigation against their employer. Many people who call my office are shocked to learn that, for a measly two or three weeks pay, they signed away their right to sue for the many bad deeds of their employer. The majority of time these agreements to not sue are upheld by the court.
- Deadline: Many employees are given short deadlines to make decisions on their severance offer. Severance agreements typically offer the employee the right to contact an attorney for legal advice before signing but only give the employee one week to sign the agreement. If you have just lost your job it is often hard to obtain legal advice in such a short time frame. Severance agreements can be negotiated and you can always ask for an extension of time. If the employer refuses to grant extra time you might have reason to fear that they are trying to pressure you into something that is detrimental to you.
- Future Employment: Some severance agreements prohibit the employee from ever applying to work for the employer again. These limitations can be particularly problematic when you work for a large employer or you work in a field that doesn’t have a lot of competition. For instance, if you are an agricultural engineer, and there are only two employers in your state that employ agricultural engineers, you have now limited yourself to one potential employer for life.
- Admission of Wrongdoing: Many agreements require the employee to admit that they violated a conduct policy. An admission of wrongdoing could lead to criminal consequences or your ability to find future employment. Be very careful when requested to admit and violation of policy or misconduct.
- Non Disparagement: Some severance agreements require you to agree to never disparage the employer. These non-disparagement clauses often come with penalties if violated. If you sign one of these agreements and then write or say something bad about the employer they could sue you and force you to pay damages. Usually, the employer is not willing to take this clause out of the agreement but at the very least it should be mutual agreement. If you can’t disparage the employer they should agree to not disparage you.
Carefully consider your choice to sign a severance agreement. It is heartbreaking when potential clients come to our offices with serious harassment or discrimination allegations only to discover that they have signed away their right to sue. If you have any questions about your severance agreement, or other employment law questions, call our office at Burkhart Law – (816) 945-6467.