Understanding Your Severance Agreement

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Should I Sign It?

You are being let go by your employer and your boss hands you a severance agreement and general release.  At first, you feel a sense of comfort expecting to receive some additional compensation.  You browse over it to see how much money your employer is offering to you.  Then you realize that there are more things in the agreement than just simply the severance pay.  In fact, you see tricky language that you don’t even understand, but affects your ability to receive the severance.  Doubt begins to creep in.  Do you sign it?  

Why Did I Get a Severance?

In the state of Florida, there is no law requiring your employer to provide you with a severance.  (Note, but if an employer provides severance packages to all of its employees and excludes you based on your protected class, you may have a claim for discrimination).  So then, why did your employer offer you a severance?  Generally speaking, your employer is agreeing to give you some additional pay in exchange for you waiving certain rights.  As you can imagine, these agreements are heavily favored in your employer’s favor.

For example, your employer may include a “non-compete,” or “non-solicitation” clause in the severance.  These are used to prevent you from going after their existing customer base, or continuing to do business in the exact same area as your employer.  Depending on the type of position you have, this may significantly impact your ability to find a new job.  There may also be a “confidentiality” clause, which restricts what information about your employer you are allowed to share in future positions.

As serious as those are, it can get worse.  Most severance agreements contain provisions that waive your rights to any legal claims you may have against your employer.  This means that you lose the opportunity to sue them even if you had actionable claims.  A good example of this is that you may have been discriminated against because of your race, sex, age, national origin, disability, or religion, but can no longer hold your employer accountable for it because you waived the right to do so.

The severance may also specify the duration of your insurance coverage, and put your pension benefits at risk.  Employers may even attempt to have you waive certain rights that cannot be waived by law.

Can My Employer Do That?

Your employer can enforce the severance agreement, but there are restrictions.  In order to fully understand the restrictions, you should seek the counsel of a dedicated employment attorney.  An employment attorney will properly review your severance, and explain what rights you have at stake.  Further, an attorney can potentially introduce new terms that the employer must abide by, and even negotiate an all-around better deal for you. 

In some cases, you may decide to reject your employer’s severance.  The only way to ensure you are making the right decision is by contacting an attorney.  An attorney may uncover new issues that you did not understand on your own.

What’s Next?

Before you see an attorney, check to see how much time your employer is allowing for you to consider the offer.  You may ask your employer for a deadline if none is expressed in the agreement.  This will allow you time to consider the employer’s offer without pressure, and provide enough time to seek outside counsel.

I Am Over 40

The Age Discrimination in Employment Act (“ADEA”), provides additional protections for any employee who receives a severance and is forty (40) years of age or older.  As a part of the ADEA, the Older Workers Benefit Protection Act (“OWBPA”), provides that a covered employee must be given at least twenty-one (21) days to consider the severance, and once signed, must be allowed a minimum of seven (7) days to revoke it.  It is important to understand these added protections so that you do not rush into a decision.

If you have received a severance and would like to know what rights you have at stake, please contact us at (407) 803-5400 or info@wilsonmccoylaw.com.  Our attorneys can help you make sense of the severance, and be confident in moving towards the next chapter of your life.