Severance Agreements

If you have recently been offered a severance agreement by your employer, you’ve likely only been given a few days to accept that agreement or to reject it. You may be feeling intense pressure to make a decision without first seeking legal guidance. However, in signing a severance agreement, you are going to be signing away many of your legal rights as a worker. Therefore, is important to take the time to have an experienced employment attorney review the terms of your severance agreement before committing to a plan of action.

Our firm has extensive experience assisting clients with severance agreement issues. We understand which terms are fair and which are not, how fairly constructed severance agreements operate, and the ways in which some employers use these contracts to attempt to take advantage of the employees that they are terminating. Scheduling a free consultation with our experienced legal team will better ensure that any severance agreement you choose to sign is one that is fair to you and is one that contains terms that are more beneficial than potentially harmful. It won’t take long for our team to review your severance agreement. Therefore, if the clock is ticking and you need to make a decision within hours or days, don’t waste any more time before getting in touch with our firm for an objective evaluation of your severance agreement specifically and your case generally.

Client-Focused Representation of Workers Facing Termination

California law does not require employers to provide employees with severance agreements upon termination. However, when severance agreements are offered, they need to be appropriately constructed, otherwise they risk trampling upon workers’ rights. As a result, if you have been offered a severance package, you deserve to feel confident that in accepting that package, you are not being treated unfairly. You also deserve to understand what your legal options may be in the event that you choose to reject the severance package that has been offered to you.

Our dedicated employment attorneys will not rush through a review of your severance agreement. We will take the time necessary to clarify why your specific contract is either fair or unfair and what the costs and benefits of either accepting or rejecting that contract may be. Our firm is passionate about upholding workers’ rights, as the law intends for workers to be protected in specific ways. Workers too often feel vulnerable in the wake of being pushed around by large corporations or demanding small business owners. Our practice is devoted to ensuring that workers’ rights are respected and that workers understand what options are available to them in the event that their rights have been infringed upon. This is why our firm offers consultations at no cost - because no worker, documented or undocumented, financially stable or financially strapped, deserves to feel uncertain about their rights under the law.

An Introduction to Severance Agreements

When an employee is terminated, especially if that worker has no significant history of wrongdoing in the workplace, that employer initiating the termination may offer the employee a severance agreement. When constructed properly and agreed upon by both parties, a separation agreement serves as a legally binding contract. As such, if either party breaches the terms of the severance agreement, the other party may hold them legally accountable for violating their rights per the conditions of that contract.

Most severance agreements function primarily to facilitate an exchange. On the one hand, the employee is asked to provide a waiver of claims against the employer and agrees to conditions of confidentiality, non-disparagement, return of the company’s property, and non-solicitation of the employer’s clients or customers. Most notably, the waiver of claims prohibits the affected worker from suing the company for wrongful termination. On the other hand, the employer offers the worker “consideration” for signing away their rights. This consideration, which is a contract term that essentially means “benefit,” usually takes the form of compensation and/or an extension of some of the workers’ employment-related benefits for weeks or months. Not all severance agreements are constructed in this way. However, this is the most common kind of agreement presented to employees upon termination.

Why Do Employers Offer Severance Agreements?

Employers offer severance agreements to terminated employees for several reasons. Primarily, severance agreements limit an employer’s liability. If a worker chooses to file a wrongful termination suit, not only could the company in question be placed “on the hook” for a significant amount of compensation in the event that the worker wins their claim, the cost of fighting wrongful termination litigation can be expensive. Additionally, wrongful termination cases can cause public relations problems for companies and can disrupt their internal narrative that their company is a great place to work. Finally, confidentiality terms within a severance agreement may help to prevent potentially costly or embarrassing information from leaking.

It is important to understand that although companies may have good motivations for offering severance agreements, the agreements that they provide aren’t necessarily sound. Too often, workers are asked to sign agreements that are, either intentionally or unintentionally, constructed in ways that are unfair to the affected workers. They may offer inadequate consideration in exchange for a waiver of claims and/or they may ask a worker to waive rights that cannot enforceably be waived under the law. It is partially for this reason that it is so important for terminated workers to have an experienced attorney review their settlement agreements before entering into these contracts. Signing away your rights as a worker per the terms of an unfair agreement is the last thing you need after suffering termination of your employment. If you’re going to sign a severance agreement, a lawyer needs to confirm that its terms are fair.

Should I Accept the Terms of a Severance Agreement?

If the terms of the severance agreement you’ve been offered are fair, you may benefit from signing it, provided that you don’t have strong grounds to file for wrongful termination in an effort to secure far more compensation than is being offered to you via the severance agreement. Once our legal team evaluates your case, we’ll be able to give you our objective analysis of the relative strengths and weaknesses of a potential wrongful termination suit. We will similarly explore the potential advantages and disadvantages associated with agreeing to the terms of the contract you’ve been given the opportunity to sign.

Ultimately, however, only you can know whether signing away your rights to sue and to speak freely about your experience is worth the amount of compensation and benefits being offered as part of your severance package. Most of the time, employers take care to offer enough compensation and benefits that the opportunity to sign the severance agreement is an attractive one. Agreements are generally structured with an employee’s salary and length of service with the company in mind. However, this isn’t always the case. If you have questions about whether we believe the terms of your agreement to be more beneficial or more problematic, we’ll answer them as candidly as we can, given the information that we have access to at the time of your free consultation.

Structure and Timing Issues

Chances are that your employer has only provided you with a few days to review and consider the terms of your severance agreement before you’ll forfeit your rights if you don’t sign it. As a result, it is important to connect with our firm as soon as you can so that we can review the terms of the agreement thoroughly and advise you of your options accordingly. As you prepare for your free consultation, take some time to look through your agreement and to note any questions you may have about the ways in which it was drafted. For example, does the agreement contain any terms about the kind of job reference you’ll be granted in the event that future employers contact your employer to ask about your performance and job history? Does the agreement prohibit you from applying for any future employment opportunities with the affected company? Will any non-solicitation clause contained within the agreement inhibit your ability to practice your profession where you live? Asking questions now about the way your severance agreement is structured will help you to make informed decisions about your legal options overall.

In the late 1980s, a Supreme Court case referred to as Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1 (1987) established the standard by which severance plans must be evaluated under a specific federal law, as opposed to most agreements, which are governed by state law. The Fort Halifax standard indicates that if there is an “on-going administrative scheme” required to administer the severance plan benefits, federal law governs those plans, not state law. The federal law in question is commonly referred to as ERISA, partially because the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. is too cumbersome to repeatedly cite in full. Once our firm assesses your severance agreement and learns more about your employment situation, we’ll inform you if your plan is subject to ERISA and therefore must be considered somewhat differently than “ordinary” severance agreements are.

Severance Plans Governed by Federal Law

Preparing for Your Consultation

Preparing for your confidential, no-cost, “no strings attached” consultation with our firm won’t take much effort. In addition to providing us with a copy of your severance agreement, bring along any other documentation that you have access to that will give us a better sense of your employment situation. If you were “written up” prior to your termination, if you have copies of emails, memos, and/or other documentation that speak to the circumstances leading up to your termination, and if you have a copy of your original employment contract, please bring these documents with you to your meeting. Additionally, take a few minutes to write down any questions you may have about your severance agreement, concerns about wrongful termination, retaliation, and/or any mistreatment you’ve been subjected to in the first place. The best way to ensure that we address each of your concerns in turn is to have them written down and easy to reference during your consultation.

If you have not yet submitted an online request form or called our firm directly to request a confidential, risk-free, no-cost consultation with our firm, don’t wait to do so. Severance agreement decisions must usually be made within a few days after the offer is extended. Waiting too long to have your agreement reviewed may result in the unintentional forfeiture of your right to accept the terms of the agreement. Act now to better ensure the preservation of your legal rights and the ability to make informed decisions about those rights. We look forward to speaking with you.

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