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Severance Agreement Reviews and Negotiations

Severance Agreement Reviews and Negotiations

Severance Agreement Reviews and NegotiationsIf your employer wants to end your employment for any number of reasons, they may ask you to sign a severance agreement. There is no requirement that you sign this agreement. However, receiving severance pay is almost always conditioned upon you signing on the dotted line. Similarly, employers generally have no legal obligation to provide severance pay to their employees, unless it is provided for in an employment agreement and/or offer letter.

What is a Severance Agreement?

A severance agreement is a document an employer might ask an employee to sign when terminated from the job for reasons such as:

  • When the company needs to lay off its workers
  • When getting rid of a particular position or department within the company
  • When an employee isn’t the right fit for the company or its culture
  • When the company needs to restructure its business
  • When an employer wants to amicably part ways with an employee that may have viable legal claims against it

In the agreement, the employer proposes to give the employee a specific amount of money and/or a continuation of health benefits, payment for COBRA premiums, among other things of value. In exchange, the employee must agree to give up some rights in return. In most cases, the employer asks employees to give up their right to sue the company.

What Does a Severance Agreement Entail?

The severance agreement gives a terminated employee an agreed amount of money to sustain them as they find their footing after termination. However, the employer might also ask the employee to waive their right to:

  • sue the employer for any and every potential employment or labor law-based claim under the sun;
  • disclose to anyone besides immediate family, attorneys, and/or CPAs, the amount of the severance payment and the existence of the severance agreement;
  • say negative things about the employer that could harm their reputation (this clause is commonly referred to as the non-disparagement provision).

The waivers aside, a typical severance agreement might also include the following:

  • The reason for separation
  • When the employee was hired, terminated, and also how long they have to accept or reject the agreement
  • The agreed amount the employer will pay the employee, either through a large lump sum or smaller, regular payments
  • Compensation for paid time off, vacation benefits, et cetera.
  • Agreement to let the employee keep their health insurance or that the Company will pay COBRA premiums on the employee’s behalf How the employee should return company equipment if in their possession

As mentioned earlier, the full list of components of a severance agreement will depend on the nature of the job, the industry, and employment laws in that particular jurisdiction.

Do I Need to Sign a Severance Agreement?

No. Employees do not need to sign severance agreements if they do not want to. This is especially true if the agreement does not serve your best interests. If you have just lost your job, you may feel like you have no choice but to sign the agreement and accept the money offered by your employer–especially if you have bills to pay.

If you ever find yourself in this situation, it’s always advisable to consult an experienced labor and employment attorney. The attorney will review the agreement to ensure it serves your best interests. And if it does not serve your best interests, the lawyer may be able to negotiate better terms with your employer or advise you on whether you can pursue other legal options against the employer. On more than one occasion, attorney Melody Rissell Leonard has negotiated severance payments for her clients that were more than quadruple* what the employer originally offered.

Have Questions? Speak to a Knowledgeable Employment Lawyer Today

If you have questions or concerns about the terms of a severance agreement, contact San Francisco employment lawyer Melody Rissell Leonard of the Rissell Law Firm. Melody is a reputable and respected employment lawyer practicing in California and Nevada. Contact Melody today to schedule a free, confidential case review.

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