Sometimes when an employer terminates an employee, the employer will offer a severance package. In a severance agreement, the employer will offer the employee a sum of money in exchange for the employee releasing the employer from liability. These concepts are discussed below.
Employers are not required to offer a severance package to employees who are terminated. Sometimes, employers will offer severance as a “perk.” In other words, a company which maintains a policy of offering severance during layoffs or reorganizations is likely to attract higher quality employees who see severance as something of a safety net, so the employee knows he or she will get more than just unemployment insurance payments if the position is eliminated.
But, more often, employers offer severance because they want employees to sign a release. A release, in its most simplest form, is a statement by the employee that he or she will not sue the employer or be able to hold the employer liable for any misconduct it may have engaged in with respect to the employee.
Whether an employee should sign a severance agreement or not is a personal decision. Agreements can offer as little as a week or less of pay or as much as many months of pay. Each employee faced with the question of whether to sign a severance agreement must evaluate whether the offer seems fair and whether the employee thinks he or she may have a legal claim against the employer. Claims may include improper payment of wages, salaries, or bonuses, sexual harassment, discrimination, or retaliation. Employees can try to renegotiate the amount of pay, but oftentimes employers, particularly large employers, use formulas to calculate severance, usually based on years of service.
A severance agreement is a contract, so generally speaking, if you sign the agreement you will be bound by it. Under some circumstances, employers must give the employee a 21 day period to consider whether the accept the agreement and the opportunity to consult with a lawyer. This obligation arises under the Older Worker’s Benefit Protection Act (OWBPA). Even if the employee signs within that period, the employee may still have seven days to revoke the agreement. But, many employees are not covered by the OWBPA, so when signing a severance agreement, you should assume that you will be bound by it, including the amount of severance you have agreed on and the release of claims against the employer.
Many employers will require that the severance agreement be signed at the time it is offered to the employee. But, if the employee has the opportunity to have the agreement reviewed by a lawyer, he or she should. There are many reasons for this. Oftentimes, employers have confidentiality requirements or restrictive covenants which may limit the employee’s ability to find new work. An attorney can review these terms to determine whether they are over broad. Additionally, discussing the situation with an attorney may reveal whether the employee has claims of discrimination, retaliation, hostile work environment, or unpaid wages. These claims may be sufficient to bring a lawsuit or may give the employee leverage negotiate the amount of the severance.
Famighetti & Weinick, PLLC are employment lawyers on Long Island, New York experienced in reviewing and negotiating severance agreements. If you have been offered a severance agreement and would to have it reviewed by a lawyer, contact a Long Island employment lawyer at 631-352-0050 or http://linycemploymentlaw.com.
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