Severance Agreements
Should You Sign a Severance Package?
Being fired or laid off can be a scary experience, and if you are offered a severance package your head may still be spinning from the news, and you likely have a limited period of time to consider whether it is in your interests to accept what your employer is offering. On the one hand, whatever money they are offering may seem like a lifeline as you start to think about unemployment; on the other hand, there are some important things you should be considering before you accept.
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What Is a Severance Package?
Because employment in Massachusetts is "at will," your employer is generally under no obligation to offer a severance package, unless you have an employment contract that says otherwise. Nevertheless, employers often do offer severance pay, as a matter of policy and/or in order to secure a release of potential claims from you.
Why You Might Turn Down Severance Pay
Generally, the basic exchange in a severance package is some amount of money or other benefits for you agreeing to release any potential employment law claims against your employer and promise not to bring a lawsuit based on anything that occurred up to and including the date you sign the agreement. You may not know when they hand you the documents whether you have any valid legal claims, much less how the value of those claims compares to the amount of money they are offering. We recommend that you use the time you are given for review and consideration to consult with an employment attorney who can help you answer that question.
In addition, some severance agreements require you to re-confirm any prior agreements you had with the employer, including non compete agreements or non solicitation agreements. There are things that can happen during the course of your employment that could invalidate or narrow the terms of those agreements that can be enforced against you, and "re-upping" on those in your severance agreement could leave you more exposed than you otherwise would be if you take a new position with a competitor of your employer. How Much Time Do You Have to Consider a Severance Agreement?
If you are being asked to release claims involving age discrimination or certain kinds of retaliation, your employer has to give you twenty-one (21) days to consider the agreement, and an additional seven (7) days to revoke your acceptance if you change your mind. Many other claims you may be asked to release do not have this specific requirement, but employers generally do not ask you to sign such a document without some amount of time to consider it, for fear the release will be void based on an argument about duress or coercion. If you are unsure whether to sign the agreement, it is always a good idea to consult with an employment attorney, who can usually negotiate an extension of the time to consider if it is warranted.
How Do You Know How Much Your Claim Might Be Worth?
If you only answer one question about your severance agreement, this is the one. This is, after all, the essential bargain of severance: you give up your right to assert claims and your employer will pay you some money. For most people, that is like considering an offer to purchase something when you have no idea what its value is. Is $5,000 too much for a painting? How could you know that without some input from someone with expertise in the actual value of the painting? If it is a Picasso, $5,000 may be a steal, unless perhaps it is signed by Picasso but is known to be a studio piece made by an apprentice and just stamped with Picasso's signature...and how would you ever know if that was the case? If you follow the analogy far enough, you will find the list of things you don't know without an expert only increases.
So it is with severance agreements. You may have an idea of what feels fair, you may know what someone else got when they were laid off last year, and you may know the amount that will meet your needs. But you don't know the value of what you are selling. And to make matters worse, if you are looking for employment lawyers you may find lawyers who tell you the maximum amount of money you could recovery because they want your business. At slnlaw, that's not what we do. That's not who we are. If you have lost your job, our mission is to help you realistically understand whether you have legal claims and what their value might be, so that you can compare that to your proposed severance package and make an informed decision. Sometimes the decision is to sign the agreement. Sometimes the decision is to try to negotiate a better deal. Sometimes the decision is to ignore the severance agreement and pursue your legal claims in court. There is no one right answer for everyone, and we want to help you find the answer that is right for you. For starters, what are the claims you may have? If you are a member of a protected class (read more about that on our employment discrimination page) and you were given either no reason or a reason that did not make sense to you for your termination, you might have a wrongful termination claim. If you have recently taken a maternity or medical leave, or you have a disability and have asked for a workplace accommodation, you may have a retaliation or disability claim. If you have recently reported sexual harassment and believe that your termination was retaliatory, you may also have a claim. Finally, even if the termination itself was lawful, if you have any questions about whether you were properly compensated at or before termination, you should discuss with an employment lawyer whether you might have a wage and hour or overtime claim. Here are some things that you should consider about the merits of your potential claims, and that we can help you think through the merits and value:
Some things to think about when considering the value of your potential claims include:
We will help you sort through all of these things, and make an informed decision about whether the severance offer is a fair price for giving up your legal claims. How slnlaw Can Help
If you are unsure whether you have valuable legal claims you would be giving up, concerned about the impact of re-confirming a non compete or other agreement, or simply need help understanding what your rights and obligations are under a severance agreement, we can help. You can use the button below to schedule a call back from a member of our team, give us a call at 781-784-2322, or fill out our web form to let us know a little more about your situation.
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