A severance agreement or separation agreement is a legal contract between an employer and an employee that specifies the terms of an employment termination. Typically, a severance agreement offers to pay a sum of money or term of continuation pay in exchange for a waiver or release of legal claims that an employee might otherwise bring against the employer.
At Correia & Puth, PLLC, our practice of negotiating severance agreements is built upon years of experience working on behalf of employees at all levels. For high-level executives, the difference between a favorable and unfavorable severance agreement can mean significant amounts of compensation, while for others, a severance agreement can be critical to providing financial security from one employment position to the next. Correia & Puth attorneys always work to maximize the financial terms, but separation agreement can also provide important opportunities protect employees’ and executives’ reputational concerns, and to provide the terms of the communication regarding the separation both internally within the organization and externally to the industry, where appropriate. Correia & Puth attorneys also work to ensure that agreements do not unfairly restrict pursuit of alternate employment, or unduly penalize employees for various supposed breaches of agreements. A good severance agreement can provide an employee an effective transition to new employment. Severance agreements should be carefully reviewed to ensure that the entire package is a good deal for the employee.
When successful, a severance negotiation can mean a positive result in difficult circumstances. A good severance agreement may mean payment of a significant amount of income, of extended benefits such as health or life insurance, of payments of bonuses or commissions to which the employee may not otherwise be entitled, additional contributions to a tax deferred retirement account, and payment of attorneys’ fees for consideration and negotiation of the agreement. A negotiated severance agreement may also “manage the message” by negotiating and arriving at the manner and substance by which co-workers, customers, and future employers will be informed of the employee’s departure. Representation by an experienced attorney may help provide real improvements to the agreement, more beneficial monetary terms, and peace of mind that the agreement will not harm the employee in the future.
At the same time, successful negotiation of a severance agreement may keep out provisions that are harmful to the employee. At times, employers may attempt to add conditions to a severance agreement that limit the employee’s ability to find competitive work, even if those restrictions would not be imposed absent an agreement. Other harmful clauses may include harsh penalties for non-disparagement or breach of confidentiality, indemnification over tax treatment of payments, or provisions that may restrict the employee’s ability to be re-employed with the employer.
Federal civil rights laws also provide protections for an employee to allow for sufficient time to consider the severance agreement, allow the employee to file claims with the Equal Employment Opportunity Commission (EEOC), and protect against a waiver of any right to assist others with discrimination claims against the employer.
If you are being terminated, or if you have been presented with a severance agreement, the lawyers at Correia & Puth, PLLC can help you interpret the agreement and all of its implications. We may also negotiate your severance agreement with your employer, to ensure that your agreement is fair and beneficial to you, and that it will not harm you in the future. Call us confidentially at 202-602-6500 or contact us online so we can assist you with negotiating the severance agreement you deserve.