When an employee is terminated from his or her job, the employer will often present the employee with a severance agreement. A severance agreement is a promise by the employer to pay salary or wages and other benefits in exchange for the employee giving up the right to sue the employer. After having reviewed thousands of those agreements, I have the following recommendations about negotiating severance agreements.
- It is better to wait to for the employer to offer a severance agreement at the termination meeting. Seeking a severance agreement before the termination decision is made is likely to backfire. The primary reason is one of leverage. If your employer believes that you want a severance agreement, the employer may decide that you are already unhappy with your job and are looking elsewhere. Why offer you a severance if your employer thinks you will quit? Generally speaking, employees must be fired to have a wrongful discharge suit.
- If you think you may be fired, investigate the employer's policies regarding severance payments. Some employers have a written policy to pay severance based on years of service or other criteria, particularly when employees are terminated in a mass layoff or reduction in force. Once an employee is fired, it will be too late to check the company's intranet for information on termination policies and severance pay. Your access to such information will be cut off immediately.
- Never agree to anything about severance at the termination meeting. Listen to what the employer says, but don't offer to sign anything and, if asked to sign, let the employer know that you will need time to talk with your spouse, family or attorney before deciding. If you are over 40, your employer will likely give you at least 21 days to consider the severance. This is because the Older Worker Benefit Protection Act requires employers to give this notice (and a 7 day revocation period) to extinguish your right to file an claim under the Age Discrimination in Employment Act.
- Speak to an experienced employment lawyer about your severance before you decide to sign. The lawyer may find that you have a case to file against your employer for wrongful discharge. If you have a viable lawsuit to file, the lawyer may be able to negotiate better terms, including more pay, payment of the employer portion of your health insurance premiums, and other benefits.
Bos & Glazier reviews severance agreements for a fixed fee. Please call us to set up an appointment or visit Bosglazier.com. The call is free.