Dos and Don’ts of Severance Agreements

by | July 19, 2020 | Employment Law

Fired?  Laid off?  I’m sure you have so many things running through your mind right now.  Here are a few things to consider when reviewing your severance agreement.

  • DON’T be pressured to respond or sign immediately. Your employer must give you time to review the agreement.  I frequently hear of employers trying to pressure or bully employees into signing severance agreements on the spot.  Do not let yourself be bullied.  You have the right to take time to review your agreement and to have a lawyer review it, too.
  • DO consult with an experienced employment lawyer. It can be helpful to have a lawyer review your agreement and explain the terms to you.  Many employers tell employees that the severance agreement is “standard,” and suggest that it contains nothing the employee would not expect.  Do not take their word for it.  Employers often have different severance agreements for different people, and they are often willing to negotiate.  This brings me to my next point:
  • DO consider negotiating. Employers are often willing to negotiate severance agreements – both the terms of the agreements and the amount of the severance.  It is worth a try.
  • DO be creative in your negotiating. Consider things you might want, in addition to more money.  Extended health insurance?  A positive employment reference?  A “garden leave” period where you could remain nominally employed and on your employer’s website while you look for another position?
  • DO consider all possible legal claims before signing a release. Severance agreements usually include releases, and when you sign a release you generally waive the right to bring any legal action against your employer.  Thus, it is important that you get legal advice to learn what possible legal claims you may have before you waive them.  You may ultimately decide that you want to pursue legal action instead of signing the release, or that you want to negotiate for more severance in exchange for waiving your legal claims.  It is a good idea to consult with an experienced employment attorney to advise you as you make this decision.
  • DON’T sign an agreement that references documents that you do not have. Make sure that you understand all the terms in the agreement and that you have all documents that they reference.  Employers often slip in things like non-compete or non-solicitation agreements in unexpected places, like documents relating to stock awards.  It is important to understand all of your ongoing obligations to your employer before signing your agreement.