Before You Sign A Severance Agreement

Bertelson Law Office has a successful history of reviewing, evaluating and strategically negotiating severance agreements, “buy-out packages”, executive agreements and non-compete agreements.  We can help you assess whether the package you were offered makes sense considering the specifics of your employment.
Feel free to contact us if you would like us to review your severance package.

 

The below is an article written by Donna Ballen taken from the website Aol Jobs:  http://jobs.aol.com/articles/2012/09/13/should-you-sign-that-severance-agreement/
Here are some important things to consider when you are presented with a severance agreement:
Take your time:Because this reader is clearly over 40, he should have been given at least 21 days to review the agreement and take it to a lawyer before he signed. If he wasn’t given that time, then any release of age discrimination claims might not be valid. Of course, the agreement probably says he had that much time, and he’s acknowledging it if he signed. If you’re being pressured to sign before you have a chance to properly review it, I suggest putting your request for more time in writing, by email, fax or some way you have proof you sent it. Put in writing that they have given you a deadline of x-date, that you want to take the agreement to a lawyer, and that you need another week or a few weeks to review it. If they deny the extra time, you now have it in writing.
Limits on your ability to work:Even if you didn’t sign a noncompete agreement while you were employed, some employers may try to sneak one into a severance agreement. If you’re signing an agreement that you can’t work for a competitor for a year or two after you leave, you’d better make sure you’re getting enough money to tide you over. Some agreements ask you to affirm you will abide by an existing noncompete agreement. If you sign, you may be giving up some defenses you had to the enforceability of the prior agreement. Be careful, and make sure you can live with any noncompete restrictions before you sign.
Confidentiality:If you are agreeing to keep company information confidential, beware. Some management-side lawyers use provisions like this to say that, if you work for a competitor, you would inevitably have to disclose confidences. In effect, you’ve signed a noncompete and didn’t even know it. I like to insert some language into these provisions saying they aren’t intended to be a noncompete agreement.
Release:If you’re giving up all the potential claims you have against your employer, you should make sure you understand what you’re really giving up. The reader who asked this question mentioned some comments made that indicate he might have an age discrimination claim. If you take your agreement to an employment lawyer, you should discuss any potential claims you have to see if they might give you leverage to negotiate a better agreement. If you were treated differently than others of a different race, age, religion, etc., you might have a discrimination claim. If you were fired right after objecting to an illegal practice, taking Family and Medical Leave or making a worker’s compensation claim, you might have a retaliation claim against your employer. These are just some examples of claims you’ll be giving up if you sign without understanding your rights.
Mutuality:If you’re releasing your employer from potential claims, can they turn around and sue you for something? If you’re agreeing not to say negative things about them, are they still able to slam you in references? If the agreement itself is confidential for you, can the employer tell coworkers and potential employers about it? These are some of the provisions I like to insist the employer make mutual. After all, if you have obligations to them after you leave, shouldn’t they have similar obligations to you?
My number one rule for signing any agreement is this: make sure you understand it before you sign. When in doubt, have an employment lawyer in your state review and explain it to you and discuss your options. Sure, it will cost some money, but isn’t it worth paying to be sure you aren’t making a huge mistake in signing?

Posted by Andrea Ostapowich