Should I sign a Severance Agreement?

*This is a transcript of the Facebook Live video from 5-3-18  Click here to watch the video.

If it’s a good deal you should sign it and sometimes whether or not it’s a good deal is a relative term. When you’re out of work, and somebody’s offered you X number of weeks of pay, it looks awfully tempting. And if you don’t have a claim against them, and there are no unreasonable restrictions on your ability to get another job, then there’s absolutely nothing wrong with signing a severance agreement. There’s also absolutely nothing wrong with if you do have a claim and you can negotiate a suitable consideration for the release, signing it and moving on with your life because that certainly is preferable to engaging in litigation.

But you don’t want to sign a severance agreement if you read it and you say, “This just isn’t fair.” If you don’t think it’s fair, you should have an attorney review it, and the attorney may say, “I know it doesn’t look fair and it may not be fair, but they really don’t have to pay you this anyway, at least it’s something rather than nothing.” And you may want to hold your nose and sign it because the money could come in handy.

Sometimes you look at these agreements, and I’ve said to many people, there’s no incentive for you to sign this. They’re asking you to not solicit customers for two years and they’re offering you two weeks worth of severance, that’s just not enough to justify the restrictions they want to put on you. Or you got an excellent claim for sex discrimination, or age discrimination, or race discrimination, or retaliation of some sort and this five months of severance doesn’t fairly compensate you.

One area that you really want to be careful on from that standpoint is making sure that before you sign it, you’ve been paid any expense reimbursements that are outstanding, any paychecks that they may owe you, commissions. You don’t want to sign one of those agreements without having considered and contained in the agreement, anything that the company might owe you up to that point. Sometimes there may be an outstanding worker’s comp claim or other claims, you want to make sure that you’re not releasing those kinds of claims at the same time that you’re accepting some severance that otherwise is a good deal. I really do encourage people before they sign anything, to call and get a good employment lawyer to review their agreement, and make sure they understand what it is they’re signing away.

And that brings me to my last question which is can a lawyer help me with my severance agreement? Absolutely. A lawyer can help you even if they don’t negotiate new terms for you, it’s important for a lawyer to explain to you what all of the clauses, what all of the terms mean. Some of them are pretty clear, and pretty concise, and easy to understand. But some of them, the legal implication of them may not be what you think they mean. You may read a non-solicitation clause for example. It may even say, non-competition agreement, and then you read what is says and it’s not really a full non-competition agreement, it just says that you can’t contact certain customers, or it may mean that you can’t contact and recruit employees away. Sometimes it may be a bigger limitation than it appears to be. Making sure that a lawyer confirms your understanding can be just as important as hiring a lawyer to actually change the terms of the separation agreement.

In terms of negotiating it, I would say frequently after a consultation with a client, I’ll say, “Here are the negotiating points. It may be better for you, the client, to just go back and talk to these folks, rather than getting a lawyer involved because some people … sometimes people overreact to a lawyer coming in. Sometimes you need that formality of a lawyer and so a lot of times, whether a lawyer can help really depends on the psychology of the situation, the relative negotiating positions between the parties, and your relationship with your former employer. And so, one thing I’m really going to do if I’m the attorney in a consultation like that, is I’m going to explore with you whether I can add value to the negotiating process, or if I can give you some bullet points and some pointers and send you back to negotiate it yourself.

Some people are very adept at that. I have a lot of sales people who come see me and they’re not concerned at all about negotiating. They negotiate for a living. They negotiate every day. They negotiate with all kinds of folks. They’re perfectly comfortable going back with some tips. Then I have other people that they don’t want any confrontation. They don’t want to deal with the former employer anymore, and they’re more than happy to pay a little bit of money to have this negotiated by someone else and so we’re happy to do that. We try to conform our advice to those situations, to customize the situation for their benefit.

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