Negotiating A Fair Severance Agreement On Your Behalf
- Have you been terminated and offered severance pay?
- Has your employer asked you to sign a severance agreement or separation agreement in order to receive the severance pay?
- Should you sign that agreement and accept what’s being offered?
The bottom line is that a severance agreement is a contract, which means you should take some time to consider all of its terms before signing your name. This is especially true if you are pregnant, have taken medical leave, requested accommodations, opposed unlawful conduct by your employer, or complained about discrimination, harassment or pay issues. If you believe that something like this has anything to do with the decision to terminate you, seek advice from an attorney before you sign the agreement.
The attorneys at Bryant Whitten, LLP, will review the agreement at no cost and advise you about these things.
Frequently Asked Questions (FAQ) About Severance Pay
The following are some common questions and answers:
1. Does my employer have to offer me severance pay?
No. Generally, employment in California is “at will” and most employers require employees to sign an acknowledgment form on the first day of employment. As such, the employer can terminate the employment for any reason or no reason, so long as it’s not for an unlawful reason.
2. Why is my employer offering severance pay if the law does not require it?
In some cases, an employer offers severance pay to employees being laid off with the hope of making the transition back into the job market a little easier for the employee.
Many times, an employer anticipates litigation and wants an employee to waive the right to sue the employer for a few weeks of pay.
An employee who signs a separation agreement waives the right to sue the employer for all claims, if the agreement is proper. Employees can still sue in certain circumstances, but this is very rare.
3. How much severance pay does the employer have to offer?
An employer does not have to offer money as part of the severance package, but most provide you with something of value. Recently, employers have been telling employees that the employer will not challenge an application for unemployment insurance benefits if the employee will sign the agreement. This could be enough if in fact the employee is not eligible for unemployment because of serious misconduct or something like that. However, this is not enough where the employee has been terminated for poor performance, which will not usually prevent you from getting the unemployment benefits.
Just about any amount of money is enough to make the agreement enforceable because money has value and the employer has no obligation to pay it other than an exchange for the agreement to waive claims against the employer.
4. What should be in the separation/severance agreement?
Terms commonly found in severance agreements typically include:
- A general release with a Civil Code Section 1542 waiver releasing all known and unknown claims.
- No admission of liability
- No present or future employment
- Nondisparagement clause which can also set forth what job reference, if any, will be given to any future employer
- Return of company property and nonsolicitation of customers clause
5. What if I am over the age of 40 years old?
Special laws, like the Older Workers Benefit Protection Act (OWBPA) and Age Discrimination in Employment Act (ADEA), protect employees who are 40 years old or more. The OWBPA says that a severance agreement must include time to consult with an attorney and a short time to change your mind about the agreement. If the employer is offering severance to a group of employees, a longer time to consider the agreement must be offered. Under the ADEA, the employer must provide information about other employees, if the severance is offered as part of mass layoffs or reduction in force (RIF).
6. Do I have to sign a severance agreement in order to get my final paycheck?
No. An employer cannot require you to sign an agreement in order to get your final pay.
7. What should not be in a severance agreement?
Employers should not ask you to waive claims for unpaid wages where there is no dispute about how much is owed. You should not be asked to waive the right to file for unemployment insurance or workers’ compensation insurance.
Do You Need Help Negotiating A Fair Severance Package?
Contact our office online and schedule a consultation to discuss your case with an experienced California employment law lawyer today.