If you have received (or are expecting to receive) a severance agreement from your employer, there are several important factors you should consider before you sign. Ultimately, while you can (and should) review your severance agreement yourself, you should also hire an experienced employment lawyer to review it for you. Severance agreements often include a variety of unfavorable provisions for employees, and employees who don’t take the necessary steps to protect themselves can end up facing unfavorable circumstances that they could (and perhaps should) have avoided.
Key Considerations Before Signing a Severance Agreement
What do you need to know before you sign a severance agreement? Here are 10 important factors to consider before you sign:
1. Severance Agreements Are Negotiable
The first factor you should consider is that severance agreements are negotiable. A severance agreement is a contract between you and your employer that establishes the terms of your separation, and this means that you and your employer can agree to modify its terms as you see fit.
While employers will often try to present severance agreements to their employees on a take-it-or-leave-it basis (and will often provide paper copies instead of files that can be revised), this should not deter you from seeking any changes that are necessary. Signing the agreement as-is could have a variety of significant and long-term ramifications, so you should not rush into signing it.
2. There is a Reason Why Your Employer is Offering You a Severance Package
If your employer has offered you a severance package, there is a reason why. Companies do not give money to their soon-to-be-former employees altruistically. Generally, one of the main benefits of signing severance agreements for employers is that they use these agreements to secure waivers of their employees’ rights to sue.
3. Signing a Severance Agreement Without Negotiating Can Be Risky
Signing a severance agreement without negotiation can be risky for several reasons. The first is that you will likely be giving up your right to sue, as we just discussed. If you have grounds to sue your employer for discrimination or any other violation of your legal rights, you may be entitled to significant damages.
The second is that you may be able to secure more (and perhaps significantly more) than your employer is offering. If your employer is offering the bare minimum that it believes is necessary to get you to sign—as is often the case—there could be significantly more on the table.
4. There Are Several Key Provisions of Which You Need to Be Aware
Severance agreements are complex and legally-binding contracts, and there are several key provisions of which you need to be aware. If you are not clear on the terms to which you are agreeing, you have no way of knowing whether you are making sound decisions with your long-term best interests in mind.
5. You May Need to Consider Issues That Aren’t Addressed in Your Severance Agreement
Another key factor to consider is that your employer’s proposed severance agreement may not address all pertinent issues. For example, severance agreements frequently omit any discussion of topics such as:
- Continued health insurance coverage
- Ownership of intellectual property (IP) rights
- References for future job applications
If your severance agreement does not address any issues that you would want it to cover, this alone may warrant negotiation. An experienced employment lawyer will be able to assist you with identifying any critical gaps in your employer’s proposed severance agreement.
6. Once You Sign Your Severance Agreement, You Are Legally Bound
Once you sign your severance agreement, you are legally bound. You must comply with the terms to which you have agreed, and you cannot expect to go back to your employer and ask for more. As a result, it is critical that you comprehensively consider all pertinent issues and make a sound decision about when (and whether) to sign.
7. Violating the Terms of Your Severance Agreement May Lead to Legal Action
Once you sign, violating the terms of your severance agreement could lead to legal action from your employer. Employers often do not hesitate to take legal action against their former employees—especially when they have contractual grounds to do so. If you start a competing business, use your employer’s IP or disparage your employer online, these are all issues that could potentially lead to swift (and potentially high-risk) legal action.
8. You May Need to Take Legal Action to Enforce Your Rights Under the Agreement
While your employer will be able to take legal action to enforce the terms of your severance agreement, so will you. If your employer does not make any severance payments when due, or if it otherwise violates the terms of your severance agreement, you may need to be prepared to hold your employer accountable.
9. You Will Want to Monitor to Ensure that Your Employer Meets Its Obligations
With this in mind, you will want to monitor to ensure that your employer meets its obligations under your severance agreement. Unfortunately, it is not uncommon for employers to try to get away with paying their employees less than they owe. If your employer tries to pay you less than it owes you, it will be up to you to identify this and respond appropriately.
10. You Aren’t Required to Sign a Severance Agreement
Finally, it is important to note that under no circumstances are you required to sign a severance agreement. Your employer cannot force you to give up your legal rights, and it cannot force you to agree to unfair terms. If protecting your ability to sue your employer for discrimination or other unlawful employment practices is your best option, this is something you need to know, and this should guide your decision-making going forward.
Discuss Your Severance Agreement with a New York Employment Lawyer at Bell Law Group
Do you need help making an informed decision about whether to sign a severance agreement? If so, we invite you to get in touch. To schedule an appointment with an experienced New York employment lawyer at Bell Law Group, call 516-280-3008 or request an appointment online today.
