Understanding Severance Agreements
Severance agreements are contractual arrangements, almost always committed to writing, in which employers offer employees money or other consideration they are not otherwise entitled to in exchange for the employees’ agreement not to sue for any claims they may have. Severance agreements are most common when employees are involved in a mass layoff; when employees have worked for a long time; and/or when employers fear that the employees may have viable claims and therefore want to “buy peace.”
Although there are no laws that require severance agreements, employers often find them to be good investments (a small severance payment can often avoid many thousands of dollars in litigation expenses). Severance agreements (also known as liability releases) generally must be professionally drafted, given that certain provisions must be added depending on the specific circumstances (for example, certain key terms must be inserted into any release involving an employee who is 40 or older).
Helping You Make The Right Decisions
An employer needs to lay off several employees, several of whom have been with the company for many years, and at least one of whom seems litigious. The employer offers severance agreements to all the employees affected by the layoff; if they sign, then the employer is almost guaranteed to be safe from wrongful termination lawsuits or other employment-related claims.
Employees contemplating a job change may actually want to be offered a severance. However, proactively suggesting severance is delicate, as employers often view such suggestions as extortion. But if they are diplomatic, employees can sometimes put themselves in better bargaining positions by being the first to suggest severance. Employees need to fully understand their bargaining power in order to maximize the severance benefits they negotiate.
Schedule A Free Consultation Now To Talk Further
I offer a free evaluation by telephone to determine whether and to what extent you should offer and/or suggest a severance. (I also help negotiate severance terms.) Call my office at Nelson Law Group in San Francisco at (866-290-0424 or toll-free at 866-290-0424.
You may also contact me online to talk about your case.