Losing your job can be a distressing experience, but it can be less concerning if your employer offers you severance pay following the termination. While it might be tempting to rush to sign a severance agreement and start receiving checks, you should always discuss the matter with an experienced severance agreement attorney in California before you sign anything. Severance agreements might have unfavorable terms, and you want to ensure your interests and rights are protected.
Severance agreements generally center around severance pay, which might also be called termination or continuation pay. This is a lump sum or payments for a set period of time the employee receives from the company after the employment relationship is terminated. Agreements might also provide for COBRA benefits for a set time period after employer-provided health insurance ends.
While this pay can certainly benefit the former employee, severance agreements tend to be in favor of the employer. This is because it is common for employers to add in terms to a severance agreement that are unfavorable to the employee and waive certain rights. Some terms that employers might include are:
Non-compete agreement – This is a provision that requires an employee to promise not to work for a competitor or start a competing enterprise. While these agreements are mostly unenforceable in California, employers might still try to get employees to sign them and limit their future prospects.
Non-disclosure agreement – This clause prohibits employees from disclosing trade secrets and other confidential information of the employer. Sometimes, these provisions are overly-broad, which can hurt the employee’s future ventures.
Non-disparagement agreement – Many severance agreements make an employee promise not to say anything negative about the company in public, on social media, or even to friends and family.
Waiving the right to sue – A major benefit employers get from most severance agreements is a provision that waives the employee’s right to take legal action against the company. This protects the employer from liability for discrimination, harassment, unpaid wages, and more.
Because of the above clauses, signing a severance agreement might not always be the best decision. For example, if you were fired for an unlawful reason, you might be able to receive more compensation by filing a wrongful termination lawsuit against the company than you would as part of the severance package. Always have a knowledgeable attorney review the terms of your agreement and the circumstances of your termination to advise you on the best course of action.
Like most contracts, severance agreements can include confusing legal language that makes it difficult to fully understand what you are signing. Whether you have been offered a severance agreement or your former employer alleges that you breached an existing severance agreement, you should have the right legal guidance.