3 Things to Know Before You Sign a Severance Agreement
In our volatile and dynamic economy, layoffs are happening with companies of all sizes. Recent statistics indicate that layoffs are up 68% year over year, with job losses affecting industries across the board. Along with layoffs come severance agreements, but many individuals have never had to review and negotiate their severance package.
One important distinction is that a layoff is not the same as a furlough. If you are furloughed, your job is basically frozen and you are still technically an employee of the company. If you are laid off, your employment is terminated.
Severance pay is not mandatory in the United States, and many employers don’t offer it. Severance terms are often outlined in an employment contract, but many companies don’t provide employment contracts to their employees. If you find yourself in a position where your employer is asking you to sign a severance agreement, there are several things you should consider.
#1 – Don’t sign the severance agreement immediately
Take your time! Don’t feel pressured to sign the agreement right away. You typically have a set amount of time to review and sign the document. Make sure to verify the time length in your specific agreement.
Having an employment attorney review the agreement before you sign can be critical, as an attorney can help ensure that the terms of the agreement are fair and that the company is honoring any previous arrangements or agreements with you.
#2 – Decide if you want to negotiate
One essential benefit of waiting to sign your severance agreement is that it gives you time to decide if you want to negotiate. Most people don’t realize that severance agreements can be negotiated – it’s up to you to determine if you want to take that path.
You may be able to negotiate things like insurance coverage, severance pay, job search resources, and more. This is where an employment attorney can help you put together your counteroffer and decide your strongest negotiation points.
If you have concerns about workplace discrimination or other issues that arose during your employment, it’s imperative to bring those up with your attorney, as that can have a significant impact on your negotiations.
#3 – Remember that once you sign the agreement, you lose a large portion of your legal rights to sue the company
Most severance agreements contain clauses stating that you won’t bring legal action against the company in exchange for the severance package. Once you sign that agreement, those clauses take effect. While there may be limited circumstances where you could still initiate legal action against the company, your options are significantly diminished once you sign.
That’s why we highly encourage people to seek legal advice from an experienced employment attorney. Ironing out all the details and negotiations before you sign the severance agreement puts you in a much stronger position – once the agreement is signed, your options are slim.
Contact an Attorney About a Severance Agreement
If you have questions about your situation or a severance agreement, reach out to the McGonigle Law Team today – we’re always here to help.
We have extensive experience with employment and severance agreements, wrongful termination cases, and other types of employment law.
The information contained herein is for general purposes only and does not constitute legal advice.
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