Being offered a severance agreement can come with a lot of questions, especially when you are being asked to sign away potential legal claims or make important decisions about your employment.
A severance agreement may address more than the amount of money you will receive. It can include provisions concerning your release of legal claims, confidentiality, non-disparagement, benefits, references, noncompete agreements, and other restrictions on what you can do after leaving your job.
You do not necessarily have to accept the first severance package your employer offers. Our North Carolina employment lawyers can review your severance agreement, explain what you are agreeing to, and help you understand whether there may be room to negotiate better terms.
With more than 70 years of combined experience, our North Carolina severance negotiation lawyers deliver more.
A severance agreement is a contract between an employer and employee that generally sets out the terms of an employee’s departure from the company.
A severance package may include:
The terms vary from one employer and agreement to another.
Generally, an employer is not automatically required to offer severance simply because an employee is being terminated or laid off.
Severance may be provided under an employment agreement, company policy, severance plan, or a negotiated agreement. In other situations, an employer may voluntarily offer severance in exchange for the employee agreeing to certain terms.
Whether you are entitled to severance can depend on the agreements and policies that apply to your employment.
You do not have to sign a severance agreement simply because your employer gives it to you.
Before signing, it is important to understand what rights you may be giving up in exchange for the severance being offered.
A severance agreement may contain a broad release of claims that prevents you from bringing certain legal claims against your employer. It may also place restrictions on your future employment or conduct.
If you are unsure whether the agreement is in your best interests, having an employment lawyer review it before you sign can help you understand the terms and potential consequences.
In many situations, severance terms can be negotiated.
Negotiation may involve more than asking for additional money. Depending on the circumstances, an employee may negotiate:
What may be reasonable to negotiate depends on the circumstances of the employment relationship and the terms of the proposed agreement.
There is no single amount of severance that every employee should receive.
The appropriate amount can depend on factors such as:
The amount offered should also be considered together with the other terms of the agreement.
A larger severance payment may not be a better deal if the agreement contains restrictions that significantly affect your ability to work or pursue a legal claim.
A release of claims is a provision in which an employee agrees to give up certain legal claims against the employer in exchange for the benefits provided under the agreement.
Depending on the language, a release may cover claims involving:
The exact language matters. An employee should understand what claims are being released before signing.
Some rights cannot simply be waived through a severance agreement, and certain federal laws impose specific requirements on releases. The enforceability of a particular provision depends on the circumstances and the language of the agreement.
It may.
Some severance agreements include new restrictive covenants or incorporate restrictions from an employee’s existing employment agreement.
These provisions may address:
If signing a severance agreement would create a new restriction on where or how you can work, that provision deserves careful review before you sign.
An employer generally cannot force an employee to sign a severance agreement.
However, the employer may condition the severance benefits it is offering on the employee signing the agreement and agreeing to its terms.
This means you may have a choice between accepting the offered severance under the proposed terms or declining the agreement and pursuing whatever other rights or benefits may be available to you.
That decision can have significant consequences, particularly if the agreement includes a release of legal claims.
If you refuse to sign, you may not receive the severance benefits offered in exchange for signing.
However, refusing a severance agreement does not automatically mean you give up every legal right you may have against your employer.
If you believe your termination involved discrimination, retaliation, harassment, unpaid wages, breach of contract, or another unlawful action, you may have legal rights that exist independently of the severance offer.
The terms of the agreement and the circumstances surrounding your departure should be reviewed before deciding whether to accept or reject the offer.
Potentially.
The fact that you have already been terminated does not necessarily mean that the severance agreement is nonnegotiable.
The employer may still be willing to change the amount of severance, benefits, release language, restrictions, or other terms.
Timing can matter, however. If your employer has given you a deadline to sign, you should understand your options before that deadline passes.
Pay attention to the deadline in the agreement.
Depending on the circumstances, federal law may provide employees with specific review periods for certain severance agreements, particularly agreements involving the waiver of age discrimination claims by employees who are 40 or older. Additional requirements can apply when such an agreement is offered as part of a group termination or reduction in force.
Do not assume that every severance agreement has the same review period. The language of the agreement and the circumstances of the termination matter.
Potentially.
An employee who believes they were discriminated against, retaliated against, sexually harassed, wrongfully terminated, denied wages, or otherwise treated unlawfully may have additional considerations when evaluating a severance offer.
The potential value of a legal claim can affect how an employee approaches negotiations.
Before agreeing to release potential claims, it can be important to understand what those claims may be worth and what rights you would be giving up.
A severance agreement can contain many provisions that deserve careful attention.
Some of the most important include:
The financial amount is only one part of the agreement.
A severance agreement may include a release of certain legal claims.
If you sign a valid release, you may be giving up the ability to bring certain claims against your employer.
However, federal and state laws place limits on what employers can require employees to waive. Some rights cannot be waived, and specific requirements may apply to certain types of releases.
This is one reason it is important to understand the agreement before signing it.
The cost of having a lawyer review or negotiate a severance agreement depends on the circumstances and the amount of work involved.
Some matters may involve reviewing a relatively straightforward agreement. Others may require extensive negotiations or an evaluation of potential discrimination, retaliation, wage, contract, or other employment claims.
During a free case evaluation, you can discuss your severance agreement and learn more about your options.
