In an ever-evolving job market, many employees find themselves facing the prospect of job loss due to various reasons, such as layoffs, mergers, or downsizing. When this happens, employers often offer employees severance agreements as a way to provide financial compensation and other benefits in exchange for the employee’s agreement to certain terms and conditions. These agreements typically contain standard provisions that both parties need to understand before signing on the dotted line. In this blog post, we’ll delve into the common standard provisions found in severance agreements, empowering you with the knowledge to make informed decisions during a challenging time.
- Severance Payment
The primary purpose of a severance agreement is to provide financial support to the departing employee. The agreement should clearly outline the amount and method of payment. Typically, severance payments are based on factors such as length of service, position, and salary. Ensure that the agreement specifies when and how you will receive these payments, whether in a lump sum, over a specific period, or according to a predetermined schedule.
- Release of Claims
A crucial aspect of severance agreements is the release of claims. By accepting the severance package, you are typically required to release the employer from any legal claims you might have against them. There are certain things, however, that cannot be waives, such as filing a charge with the Equal Employment Opportunity Commission (“EEOC”). It’s essential to understand the scope of these releases and consult with legal counsel to ensure you are not inadvertently giving up rights you may wish to pursue in the future.
- Non-Disparagement Clause
Employers often include non-disparagement clauses in severance agreements, preventing you from making negative or damaging statements about the company or its employees. While these clauses are standard, the National Labor Relations Board issued a ruling earlier this year whereby employers are no longer permitted to include a non-disparagement clause in severance agreements. This is a shift from what was previously permitted and enforceable.
- Confidentiality
Many severance agreements contain confidentiality provisions, which require you to keep the terms of the agreement, as well as any confidential company information, confidential. It’s essential to understand the extent of this obligation and whether it may impact your ability to discuss your severance agreement with others, such as potential future employers.
- Non-Compete and Non-Solicitation
In some cases, employers may include non-compete or non-solicitation clauses in severance agreements, limiting your ability to work for competitors or solicit former colleagues or clients. These clauses are state-specific and can have significant ramifications on your future job prospects, so it’s vital to carefully evaluate their scope and duration.
- Return of Company Property
Severance agreements typically include a provision requiring you to return all company property, including laptops, cell phones, and confidential documents. Ensure that the agreement specifies a reasonable timeframe for returning these items.
Severance agreements are complex legal documents, and it’s crucial to understand their standard provisions before signing. Seek legal advice to ensure that the terms are fair and don’t inadvertently limit your future opportunities. While these agreements can provide much-needed financial support during a job transition, it’s equally essential to protect your rights and interests as you navigate this challenging time in your career. Remember, knowledge is power, and understanding the fine print can make all the difference when it comes to safeguarding your future.
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.
