Read This Before You Sign That Severance Agreement

severance agreement questions

Question: I feel that I am being discriminated against at my job. I have worked there for 20 years with no problems at all. In the last month I have been written up once for something that has always been done with no problems. Today I was confronted with a severance package. I am totally confused by all of this.

I have been repeatedly asked what my plans for the future were, when was I going to retire, etc. Now I am given this package and told that I should sign it and return it tomorrow. When I asked what I thought were very important questions because of the confusion in the writing of these papers, we still got conflicting answers. The bottom line is that if I do not sign and return them by tomorrow the threat of being fired with nothing at all has already been given to me. Please, please, help me make the right decision.

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This is a great question! I encounter many people who are presented with severance agreements and are pressured to sign right away. Unfortunately for the reader who wrote this question, he needed legal advice right away. This isn't the right forum for that. As always, if you need legal advice for your specific situation, contact an employment lawyer in your state.

Still, I thought the question was worth exploring because it happens so often. The short answer is, never agree to quit your job unless you're offered something substantial, like enough severance in a fair agreement that makes it worth your while to do so. The fact that the employer was pressing for a quick signature tells me that something was probably fishy about this agreement. Never, ever sign anything you don't fully understand.

Here are some important things to consider when you are presented with a severance agreement:


Take your time:
Because this reader is clearly over 40, he should have been given at least 21 days to review the agreement and take it to a lawyer before he signed. If he wasn't given that time, then any release of age discrimination claims might not be valid. Of course, the agreement probably says he had that much time, and he's acknowledging it if he signed. If you're being pressured to sign before you have a chance to properly review it, I suggest putting your request for more time in writing, by email, fax or some way you have proof you sent it. Put in writing that they have given you a deadline of x-date, that you want to take the agreement to a lawyer, and that you need another week or a few weeks to review it. If they deny the extra time, you now have it in writing.


Limits on your ability to work:
Even if you didn't sign a noncompete agreement while you were employed, some employers may try to sneak one into a severance agreement. If you're signing an agreement that you can't work for a competitor for a year or two after you leave, you'd better make sure you're getting enough money to tide you over. Some agreements ask you to affirm you will abide by an existing noncompete agreement. If you sign, you may be giving up some defenses you had to the enforceability of the prior agreement. Be careful, and make sure you can live with any noncompete restrictions before you sign.

More: How Do I Prove I'm Paid Less Than My Male Co-Workers?


Confidentiality:
If you are agreeing to keep company information confidential, beware. Some management-side lawyers use provisions like this to say that, if you work for a competitor, you would inevitably have to disclose confidences. In effect, you've signed a noncompete and didn't even know it. I like to insert some language into these provisions saying they aren't intended to be a noncompete agreement.


Release:
If you're giving up all the potential claims you have against your employer, you should make sure you understand what you're really giving up. The reader who asked this question mentioned some comments made that indicate he might have an age discrimination claim. If you take your agreement to an employment lawyer, you should discuss any potential claims you have to see if they might give you leverage to negotiate a better agreement. If you were treated differently than others of a different race, age, religion, etc., you might have a discrimination claim. If you were fired right after objecting to an illegal practice, taking Family and Medical Leave or making a worker's compensation claim, you might have a retaliation claim against your employer. These are just some examples of claims you'll be giving up if you sign without understanding your rights.


Mutuality:
If you're releasing your employer from potential claims, can they turn around and sue you for something? If you're agreeing not to say negative things about them, are they still able to slam you in references? If the agreement itself is confidential for you, can the employer tell coworkers and potential employers about it? These are some of the provisions I like to insist the employer make mutual. After all, if you have obligations to them after you leave, shouldn't they have similar obligations to you?


My number one rule for signing any agreement is this: make sure you understand it before you sign. When in doubt, have an employment lawyer in your state review and explain it to you and discuss your options. Sure, it will cost some money, but isn't it worth paying to be sure you aren't making a huge mistake in signing?

That's all for this edition of "Ask A Lawyer." If you need legal advice, it's best to talk to an employment lawyer in your state, but if you have general legal issues you want me to discuss here, whether about discrimination, employment contracts, medical leave, or other employment law issues, you can ask me at AOL Jobs.


Note to readers: I've edited this question to delete information that might identify the questioner, since the questions and my answers aren't confidential, and for brevity. I'm giving a general answer under federal law, not specific legal advice. Your state may have laws with more stringent requirements for employers, so always check with an employment lawyer in your state about your specific situation.


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Donna Ballman

Donna Ballman

Contributor

Donna Ballman’s book, Stand Up For Yourself Without Getting Fired: Resolve Workplace Crises Before You Quit, Get Axed or Sue the Bastards, was the Winner of the Law Category of the 2012 USA Best Books Awards and is currently available for purchase. Donna is the award-winning author of The Writer’s Guide to the Courtroom: Let’s Quill All the Lawyers, a book geared toward informing novelists and screenwriters about the ins and outs of the civil justice system. She’s been representing executives, physicians and employees in Florida, including negotiating severance agreements and litigating discrimination, sexual harassment, noncompete agreements, and other employment law issues since 1986. Her blog on employee-side employment law issues, Screw You Guys, I’m Going Home, was named one of the 2011, 2012 and 2013 ABA Blawg 100 best legal blogs, Paralegal 411’s Top 25 Labor and Employment law Blogs of 2013 and the 2011 Lexis/Nexis Top 25 Labor and Employment Law Blogs.

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61 Comments

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mitzi

i was fired from beverly hills abortion clinic brandeis medical for complaining to senior protective services that the doctor has his disabled mom living in the abortion clinic. there is also a dog who is not housebroken in the abortion clinic. The doctor had a hole large enough for him to walk through knocked in the wall. this was done without a permit from code enforcement or permission from building management. I also complained because a doctor, allan schwartz, who had lost his license to practice medicine for fondling a young boys penis was in the office seeing patients. the dr calls nelli a "nurse" but she is NOT a nurse. there is no nurse in the abortion clinic. when I was fired there was dog pee on the floor

December 11 2012 at 11:21 AM Report abuse rate up rate down Reply
Tony

Happened to me. 25 yrs without a bad mark at Dow. they have the bottom 5% rule. every year they try and fire what they think of as the bottom 5% of their workforce. just by chance most are in their 40's. i documented a ton and when they threatened not to give me a severance I was going to expose the pratice. I got my severance and another job in 3 weeks. They don't care about you. It was amazing after I brought this up to some friends how many knew of others that went thru the same thing there. they can't fire a large amount of people in their 40's because of age discrimination but they can fire some without showing a definate discrimination pattern.
if its a larger company, that makes it difficult to fight because they have the high priced liers (lawyers) that have fought cases and won some and lost some so they know what to do and what not to do. I have seen the printed e-mails with the amounts that leaders got for releasing employees. this was long before i was let go. wish i would have kept a copy. they also hate bad publicity. you have to make noise by going to the media or other means.
its unfortunate that big business has come to this in trying to save money. they will tell you that you shouldn't take it personal and its only business. all the while you are worried about losing your home and how are you going to take care of your family. I have worked as a union member and salary. I have issues with how unions are run now but I tell you what, I wish I had some backing back then.

September 17 2012 at 2:07 PM Report abuse rate up rate down Reply
ejhatticus

The problem here is that there are employees that take advantage and maniputlate the system and in response you have all these rules and reges to to weed them out. Unfoturnatley this lays the ground for bad bosses to use these tools against good employees. What is the solution? Well for the good employee caught in this trap document, document, document. Not that it will do you any real good. Just know that despite the saying in the financial world that past performace is not indicative of future returns, your work ethic will be recognized and hailed by those that matter. Had a bad boss, say so with dignity and do not overstate how bad they were. Just be honest and show what you bring to the table. By no means am I saying sign something the bad boss brings you, cut an equitable deal and walk away.

September 14 2012 at 9:41 PM Report abuse rate up rate down Reply
cslinz62

Huh...well, it sure doesn't work that way at Exxon-Mobil in the housekeeping dept. with the supervisor Lisa Benavente. She would just soon fire you if you're white as to look at you.

September 14 2012 at 8:48 PM Report abuse rate up rate down Reply
modmax4650

UNION!

September 14 2012 at 8:34 PM Report abuse rate up rate down Reply
thegreattobe

Great article, great advice. I was abruptly terminated by my employer two years ago after 28 years on the job with no direct warning. I was cut off from all email and escorted to the VP's office (I had originally hired this guy) like a criminal and presented with a severence letter to sign. Fortuneately a little voice inside me said "don't sign." I went to my wife's attorney and got great advice especially about the subtopics you listed like confidentiality and mutuality, and my employer agreed to all of the changes I wanted. It cost me $1400, but the peace of mind was worth.

September 14 2012 at 7:40 PM Report abuse +1 rate up rate down Reply
1 reply to thegreattobe's comment
EmployeeAtty

Thanks, the greattobe! I'm glad you found it helpful, and also that you managed to get a better package in your situation.

September 15 2012 at 12:55 AM Report abuse rate up rate down Reply
Greenbean

I was given a severaance package and never looked back. I realized that all those years I dedicated to this company were not valued. I felt worthless and ashamed as well as relieved for it to be over. I was shocked by the lies in the room by the President and his stooge. I was told things I had no knowledge of. But my mother always told me if you cannot say something good do not say anything at all. So I kept silent, I was mostly in shock. The story did not end here, the new person proceeded to defame me and wrote letters to my current employer. The President and his cronies spread rumors about me. One such rumor was that he had to let me go because I was after his job. I realize today how awful this job was, I tried to do my honest best while there, to serve our customers honestly and with integrity. I never would have believed something like this would happen in real life. After being gone and starting over, I am truly grateful that I left when I did, otherwise I would not have the great job I have today. I try to stay clear of former associates with the exception of a few people that life is over as if it never happened. It was a dream job which turned into a nightmare. If this were to happen today, would I seek legal council, maybe but that would have kept me involved with people that are not nice people and prolonged the nightmare. So, it was like a toothache, it hurts for a while until the tooth is pulled then all you feel is relief. Why prolong the experience.

September 14 2012 at 6:11 PM Report abuse +1 rate up rate down Reply
1 reply to Greenbean's comment
Cindy

Greenbean, What kind of company did you work for? I know exactly what bosses from hell are like. They can also be nicey-nice to your face, but all along preparing to stab you in the back. There was one job that I had that I would stay for up to 6 hours after work (unpaid) just to get the paperwork done because the work day was completely filled with seeing clients and answering the phone. In another branch, the worker who had the same job as me was given one day a week, free of clients and phone calls, just to take care of the paperwork. When I spoke to her, she couldn't understand how I could manage without a "freeday". She also had previous job experience and knowledge with the policies by which we had to make our determination of elegibility for the clients. I was given the job without any training and expected to know the policies from the start without ever having read any of the manuals....and seeing clients, and answering the phones. It was crazy, to say the least, but by the time that job ended (it was only a temp job), I knew the policies and got every thing completed........of course I worked almost twice as many hours for the same pay.

September 14 2012 at 7:06 PM Report abuse +2 rate up rate down Reply
Greenbean

My former employer got rid of me by doing away with my job. Hiring someone he knew to take my job at a different title and high pay and position. I had only been written up one time for taking a full two week vacation. Other than that I had always received excellent reviews. Then things changed when took on my handicapped nephew after a devasting auto accident which left him a quadreplegic at 13 yrs old. This employer and Human Resource person kept denying me dependent coverage for him. Each year I would reapply to get him covered and was denied I was told that I had missed the signup. I was paying for my dependent coverage and outside health insurance for him. Then the President took me aside and told me that I would never move up from my current position not because I was a woman but because Ihad children, he told me to look around and see how many women with children were successful in this organization. He said that these women had husbands at home that took care of things. And had no children to care for, they are a handicap. I was baffled. When I first started back in 1982 I was told by the other woman in the office that "we do not promote women in this company". Finally I had my calendar marked on when to resubmit my application for coverage and sent it in. I was denied again, I again was given the same reason from our HR person who was the Presidents Secretary. I called the Insurance company to find out why I was denied. I was hurt and angry. I was told it was not them, it was my employer that was denying his coverage. I was shocked because never did anyone tell me the would not cover my handicapped dependent. Then my friend who is a lawyer said that what they did was illegel she said that as my court ordered legal dependent my company was breaking the law in denying me coverage. So I went back to the HR person who was the Presidents Secretary and told her that my friend who is a lawyer informed me of a law that requires my employer to cover my dependent especially since he had been denied coverage for several years now. All kinds of things started happening then. Not included in important meetings that I had always participated in in the past, not being informed of meetings. Documents coming up missing from my desk, not getting important information necessary for me to complete projects from accounting department. Moved to office which had formerly been a closet with no windows. Once the Chief Accountant came into my office and called me horrible names, as well as a bitch. Then the president told me I had to write her an apology letter. Which I did apologize for for doing my job and causing her to call me a blankety blank bitch. I was sorry she became so angry that she had to raise her voice at me. I told my boss that I wanted a letter of apology in return. I knew he wanted to put that letter in my file. After he read the letter he told me that a letter was not necessary and declined my letter of apology.

September 14 2012 at 5:56 PM Report abuse rate up rate down Reply
1 reply to Greenbean's comment
EmployeeAtty

Wow, Greenbean, that sounds awful. It sounds like they may have targeted you because of your association with a person with a disability, which is illegal. If it was less than 300 days ago, you might want to talk to an employment lawyer in your state.

September 15 2012 at 12:59 AM Report abuse rate up rate down Reply
ernest

It happend to me .I was given the sign it or you no longer work here .I asked if I could call my lawer and they said the phones are for company business only. now I look for work.

September 14 2012 at 5:52 PM Report abuse +1 rate up rate down Reply
bolomark3

This is well written and the sad truth about today's employers. Best thing for many is to have a pre-paid legal service available that allows you to be referred to an attorney you need for your situation at little or no cost to you. That way if you need immediate help you can find it quickly and easily. The company will always try to do the best to save them the most money at all cost. Even though it may be illegal or frowned upon.

September 14 2012 at 5:38 PM Report abuse +2 rate up rate down Reply
1 reply to bolomark3's comment
EmployeeAtty

Thanks bolomark3! Although the prepaid legal plans I've seen usually exclude employment law, especially if they're obtained through the employer, but if you have one that includes employment law then that's a great idea.

September 15 2012 at 1:01 AM Report abuse rate up rate down Reply

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