The majority of states are “at-will” employment states. This means an employer can hire or fire employees for any (lawful) reason, or for no reason at all. In some circumstances, workers and executives who are terminated or fired, may be offered a severance agreement. This agreement, also known as a separation agreement, is a contract that is often structured to protect employers. The severance agreement may ask you to waive certain legal rights, in exchange for severance pay, medical benefits, stock options, and even references for a prospective employer.

What is a Severance Agreement?

Severance agreements are contracts between employees and employers that outline the terms of the employee’s termination. These contracts typically include details such as the amount of severance pay, continuation of benefits, and confidentiality agreements. They also specify the official date and reason for termination, any obligations the employee must adhere to (like non-compete agreements), and the amount of severance pay the employee will receive.

Employers in New York State are not legally required to offer severance pay unless specified in a contract or agreement. However, many employers voluntarily offer severance pay to high-level employees, executives, and employees terminated due to circumstances beyond their control, or to avoid the risk of getting sued in the future.

Should You Sign a Severance Agreement?

The purpose of the Severance Agreement is to define the rights of both employer and employee when an employee is terminated. Scrutinizing the terms and conditions before accepting a severance pay offer is crucial. Employers often include provisions that are beneficial to the company and not the employee, such as restrictions on working in the same industry for a certain period. Many severance agreement terms that restrict the rights of workers and executives are predictable:

• Non-disparagement clauses prevent employees from making negative comments about an employer (written or verbal). If a non-disparagement clause is a non-negotiable part of a severance agreement, consider demanding a mutual non-disparagement clause that prevents the employer from bad-mouthing you once you leave.
• Non-disclosure agreements are common and prohibit employees from disclosing confidential business information. They may also prevent you from disclosing the existence of the severance agreement or the reasons for your termination.
• Non-competes are falling out of favor and may be difficult to enforce. However, they restrict workers from accepting jobs with competitors in a defined geographical area.  These terms may have a profound effect on your ability to seek alternative employment and should be avoided, if possible.

Most importantly, nearly all severance agreements include a general release that requires you to waive the right to bring a future lawsuit against your employer. This includes the right to sue your employer for discrimination and retaliation. When presented with the severance agreement, the best practice is to consult with an attorney at Solomon Law Firm, PLLC to evaluate its total monetary value and to determine which rights you are waiving in exchange.

Negotiating Your Severance Agreement

Upon receiving a separation agreement, it’s important to remember that it’s an opening offer. You have the right to negotiate for  better terms, including more money, stock options, and benefits. Whether or not negotiation will be successful depends on a variety of factors, including:

• Length of employment
• Total Salary and Compensation package while employed
• The circumstances surrounding your termination
• Any potential legal claims you may have against your employer
• The financial status of your employer

If for example, you were a long time employee with positive performance reviews and were suddenly terminated after complaining about sexual harassment or, perhaps, you blew the whistle on corporate malfeasance, your bargaining position will be stronger than an employee who was let go during a routine round of layoffs.

Why Choose Us as Your Severance and Separation Agreement Attorneys

At Solomon Law Firm, PLLC, our dedicated employment attorneys have obtained high-value severance packages and significant settlements on behalf of employees and C-Suite executives. We pride ourselves on providing personalized attention to every client we represent. When you trust us with your severance agreement negotiation, you can be confident we won’t leave a single dollar.