Losing your job is never easy, and if a severance agreement is offered, it can be tempting to jump at the offer without really considering its ramifications. After all, facing an uncertain future can make any amount of severance pay look attractive. But, some caution is in order before you accept any agreement. Here are the basics every employee should know about severance agreements.
Why Is My Employer Offering a Severance Agreement?
There are numerous reasons your employer may offer severance agreements. Of course, it may have been part of your employment contract, and they are required to do it. Or, if you were suddenly laid off with no warning, some state laws may require it.
Otherwise, your employer is not required to offer any type of severance agreement. They may do so because it is typically considered a cost-effective means of guaranteeing the least disruptive termination possible. Sometimes part of the severance agreement is your guarantee of silence, agreeing not to sue, or some other agreement to part ways amicably. Often, employers include some sort of non-compete agreement in a severance package.
Severance agreements with benefits to help a terminated employee can also be an act of common courtesy on the part of your employer. Finding a new job can be difficult, and your employer may simply wish to help you remain on a solid footing while searching for a new job. It can also bolster the employer’s reputation, enhancing their ability to attract top talent.
What Should I Look for in Severance Agreements?
Any severance agreement should include some basic provisions that help you remain financially solvent for a period of time, as well as protective measures like insurance. You should look for these provisions in any severance agreement offered:
- Severance Pay: The standard is two weeks of pay for each year you worked for the company, but there is no law demanding this amount. Be aware that taxes will be due on this income, and you may be responsible for them yourself if you are paid a lump sum.
- Health Insurance: You should ask that your insurance coverage be continued until you find another job or make other arrangements. Also, inquire about disability coverage or other options that were provided by the company.
- Paid Time Off: You should be paid for any earned and unused paid time off, like vacation or paid sick days.
- Stock Options: Any stock you own in the company should be negotiated or sold; make sure you get in writing when and how you can use any stock you keep, when and how you can sell it, or other options.
- Placement Assistance: Your employer may agree to pay for placement training or assistance for several weeks or months.
- Company Perks: You may also be able to keep any company-provided equipment like computers or tablets. You may also wish to continue a company-sponsored health club membership.
Can I Negotiate Severance Agreements?
Being terminated from a job may make you think your standing with the company is at an all-time low – but this is not always the case. You may have more leverage than you realize. If your job is ending after a long and successful tenure, the company may deem it prudent to do something reasonable to protect themselves and their standing with other employees.
You may also possess knowledge that could be detrimental to the company if it became known. Evidence of violations, discrimination, or other wrongdoing could prompt your employer to be more open to negotiations. Employees can and should attempt to negotiate the terms of severance agreements to get the best benefits possible.
An Employment Law Attorney in Memphis or St. Louis can help you review any severance agreement offered to you and provide valuable advice that can help you during severance agreement negotiations. Entering the room to negotiate with a lawyer by your side can sometimes make a big difference in how the talks are carried out.
Contact The Crone Law Firm in Memphis, TN, or St. Louis, MO, by calling (901) 737-7740 or completing the contact form online.