Perhaps in connection with a reduction in force, an involuntary termination, or a mutually agreed separation, your employer has presented you with a severance agreement offering you financial and other consideration (“Severance Benefits”) in exchange for your signing a release of all claims. Should you accept the offered Severance Benefits and sign the agreement presented to you by your employer?
How Can a Severance Lawyer Assist?
A severance lawyer can assist you in answering that question by, among other things, (1) identifying any leverage you may have to enhance the Severance Benefits being offered, (2) developing a strategy to obtain enhanced Severance Benefits, (3) ensuring that implementation of that strategy does not “burn bridges” between you and your former employer, and (4) addressing, regardless of whether additional Severance Benefits are obtained, any problematic severance agreement language.
Common Severance Terms
Most severance agreements require that a former employee, in exchange for Severance Benefits to be provided by the employer, whether in a lump sum or a stream of payments:
- Release all claims against the employer and its past and present officers, directors, and employees,
- Keep confidential the terms of the severance agreement as well as all other confidential information of the employer,
- Agree not to disparage the employer and its past and present officers, directors, and employees, and
- Cooperate with the employer should the employee’s knowledge be needed in connection with litigation or otherwise.
Considerations That May Provide Leverage for Employees to Enhance Offered Severance Benefits
Former employees with legitimate claims that their termination or their treatment while an employee was because of discrimination, retaliation or harassment will often have significant leverage to enhance the Severance Benefits being offered by their former employers. A severance lawyer is uniquely suited to assessing the strength of the potential discrimination, retaliation or harassment claims and the appropriate strategy to obtain a better severance.
In some instances, it may be appropriate for an employee to utilize the good cop – bad cop strategy by negotiating directly with the employer (often utilizing language suggested by a severance lawyer). In other instances, a pre-suit demand letter from a severance lawyer is most effective in obtaining enhanced Severance Benefits.
Because employers typically prefer to resolve employee disputes quietly and confidentially and before a lawsuit is filed, they often are inclined, but not always, to consider adjustments to the offered Severance Benefits or the language of the severance agreement, or both. Employers may also be motivated to enhance offered Severance Benefits because they:
- Wish to avoid adverse publicity concerning embarrassing events or statements;
- Wish to avoid threatened litigation;
- Will likely need the cooperation of or a “brain drain” from the departing employee;
- Will likely need the departing employee to testify relating to pending or threatened litigation;
- Believe that claims or a suit by the departing employee could negatively impact upcoming capital events;
- Want the departing employee’s assistance in transitioning client relationships and preserving client goodwill; or
- Want to restrict potential competitive activities by the departing employee who is not subject to non-competition or non-solicitation of client restrictions (even though the enforceability of such restrictions agreed to at the time of termination or post-termination may be questionable).
Other Severance Negotiation Considerations
A release of all claims requested from an employee 40 years of age or older must, by federal law, state that the employee has 21 days (and in some instances 45 days) to decide whether to sign the release in exchange for the offered Severance Benefits. In many instances, such agreements state that the offered Severance Benefits will be withdrawn if the employee does not accept and sign the agreement within the decisional period. An employee’s willingness and ability to ignore this arbitrary deadline and negotiate beyond the decisional period can be an effective negotiation tactic and a sign of strength. Whether to do so, of course, should be discussed with a severance lawyer.
A severance lawyer can also assist in identifying potential “asks” in addition to a larger severance payment. Some examples of additional “asks,” which may or may not be of value to the departing employee, are:
- Garden leave (a period of time during which the departing employee remains employed but has no work obligations and can negotiate with prospective employers without having to acknowledge or explain having been terminated);
- A letter of recommendation;
- Reimbursement of COBRA premiums (because the reimbursement obligation typically will end when new employment is obtained, this provision serves as a disincentive for employers to interfere with the efforts of their former employees to obtain new employment); and
- Retention of the Company cellphone or other Company property used by the employee.
Negotiating Severance Agreement Language
In order to incentivize former employees to comply with their post-employment obligations including, for example, obligations of confidentiality, non-disparagement, non-competition, and non-solicitation, employers often condition the receipt of Severance Benefits upon continued compliance with those obligations. In some instances, employers require that the Severance Benefits be returned to the employer in the event any of those obligations are breached by the former employee.
With the assistance of a severance lawyer, such problematic language may be removed or it may be limited in its application. For example, severance agreement language could be revised to provide that the loss or reduction of Severance Benefits will be triggered only if the former employee’s breach was “material” or only after the former employee was notified of the breach and failed to timely cure the breach.
A severance lawyer can also assist in determining whether it would be advisable or beneficial to obtain from the former employer (1) a release in favor of the former employee or (2) a commitment not to disparage the former employee. While employers are typically reluctant to do so, modified or limited employer releases and employer non-disparagement agreements are not uncommon.
Key Takeaways from a Severance Lawyer
- Developing and implementing the appropriate strategy to enhance your severance is critical.
- A severance lawyer can identify leverage points and the appropriate “asks” and strategy.
- Seeking and obtaining better Severance Benefits need not result in “burning bridges.”
- Even in the absence of obtaining better Severance Benefits, changes to the language of the severance agreement can substantially minimize the likelihood that payment of the Severance Benefits will stop or worse, that the Severance Benefits must be returned to the employer.
Contact a Severance Lawyer at Rogge Dunn Group
The Dallas employment lawyers at Rogge Dunn Group handle all aspects of severance negotiations. To learn more about the severance lawyers at Rogge Dunn Group, you may contact Bryan Collins (firstname.lastname@example.org 214-239-2762), Rogge Dunn (email@example.com 214-220-0077), or any of our other severance lawyers.
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