It is very common for an employer to offer a departing employee a severance agreement (also called a “separation agreement”). But employees need to be careful – severance agreements contain important provisions that can significantly affect your rights.
If you have been offered a severance agreement, you may have questions about whether the agreement is reasonable, or whether you can negotiate more favorable terms.
What is a Severance Agreement?
A severance agreement is an agreement between an employer and an employee which specifies the terms of the employee’s separation from the employer.
A severance agreement is typically a legally binding document, but it can often contain tricky and confusing language.
A severance agreement will contain a number of provisions that can affect your legal rights. There are a number of common important sections in a severance agreement, including provisions regarding:
- Severance pay;
- A release by the employee of all claims against the employer;
- Continuation of health care benefits;
- Non-compete or non-solicitation requirements;
- Eligibility for unemployment;
- No rehire issues;
Of all of these provisions, the one that employees need to be careful of and which is usually the most important, is the “release.” When employers offer severance agreements to employees, it is usually to get them to sign a release of all of their claims against the employer. By signing a release, you may be giving up critical rights if you sign the agreement without consulting with an attorney.
It is advisable to seek out the advice of a lawyer before signing a severance agreement. Once you sign a severance agreement, it is usually impossible to change the terms of the agreement (unless there is a revocation period, but you are advised to speak to a lawyer before relying on a revocation provision).
A severance agreement lawyer will also be able to advise you on whether the amount of money being offered is sufficient, and also advise you on whether the release is fair, given your particular set of circumstances. Every case is different, and every severance agreement should be reviewed carefully.
The lawyers at our office regularly consult with departing employees who are trying to understand the terms of their severance agreements. If you have been presented with a severance agreement, you can reach out to our office for a free confidential consultation and to learn more about the specific provisions of your severance agreement. For a free 15-minute consultation with a California employment lawyer, you can click here, or call us at (310) 824-3828.