Severance Agreements

After years of good work and loyal service, your employer hands you a severance agreement. They want to pay you a lump sum for leaving quietly. In return, they want you to waive all your rights. You should not sign right away. The employer will often tell you in writing that you should consult a lawyer about the severance agreement. And there are good reasons that you should do that.

First, you should consult an employment law attorney to see if you have any employment claims which you are giving up. You should be compensated for giving up these claims. Second, you should consult an employment law attorney to make sure that the severance agreement is fair, that you will get all your vested benefits, that you will get unemployment benefits, and that you will be able to get another job. Third, there may be room to enhance the agreement, either in monetary or other terms. In any event, if you don’t ask, then you don’t get.

Depending on the case, we work in the background to help you negotiate a better package, or we make direct contact on your behalf with your employer.

You may be worried that your employer could take the severance agreement off the table if you contact an attorney to negotiate for you. In reality, there is little incentive for an employer to do that, and it is a very rare occurrence. The employer would just be encouraging a law suit in a situation where they were prepared voluntarily to make a severance payment. There are numerous reasons that an employer might agree to enhance a severance agreement. You may be enable to increase monetary benefits based on fairness, your work history or your connections within the company. Sometime changes can be made that will enhance your position with little detriment you employer. Or your employer needs to compensate you for a legitimate claim that they have treated you in violation of applicable employment law.

There are many issues which come up in negotiating severance agreements. Some examples are listed below.

If you have been let go in a reduction in force and you are over the age of 40, you must be given a list of positions and the ages of employees. There may be evidence that your employer has let go a disproportionate amount of older workers, and that there was age discrimination in the lay off decisions.

Severance is paid in a lump sum or on a salary continuation basis. In salary continuation, you may be able to get some ongoing benefits, such as payment of health care benefits. The issue here is that your employer may want to cut off salary continuation if you get another job. In lump sum payments, you would get the money up front, but you may not get continuing health benefits.

Sometimes you can trade off benefits you don’t need for cash. For example, the employer agrees to pay for outplacement services for a certain number of months. If you don’t want those services, you could ask the employer to pay you the cash instead of the outplacement company. If you don’t need payment of continuing health benefits (e.g., you will be covered through your spouse), you could ask to convert that to cash as well.

If you are close to vesting in a pension plan, perhaps the agreement can be structured so that you will be able to vest in the benefits.

Most employers will agree to give you a neutral reference, and in some instances you may be able to negotiate a mutually acceptable letter of reference. This can be especially helpful if you have been employed at one company for a long time. Also, your employer may be willing to help you look for a job by permitting you to continue to use office contact information and phone numbers during your job search.

It is also a good idea to clarify that you will be getting all your vested benefits and whether there are any issues with respect to unemployment.

The issues discussed above are just some of the issues that could come up in your severance agreement, and there are many other depending on your particular circumstances.

In our 25 years experience in employment law, we have helped employees in New York State and New York City with their severance agreements, and have obtained larger severance payments and more favorable contract terms than were originally offered.

Contact us online or call us at (212) 949-1001 so that we can review the severance agreement of your New York State or New York City employer.