Severance Agreements

As employment attorneys at the Law Office of Stark and Heiner, we are often called upon to review various agreements between employers and employees.  Many times, those agreements involve severance for an employee who had just been involuntarily terminated.  Severance agreements are contracts between an employer and employee wherein the employee is giving up various rights in exchange for, usually, financial compensation from the employer.  That compensation is above and beyond what the employee would otherwise be entitled to.


Severance agreements are contractual in nature and, as such, it is always a good idea to have them reviewed by an attorney who specializes in employment law.  The attorney can explain the legalese to you, as well as educate you on the rights that you have, as well as the rights you are waiving if you sign the severance agreement.


Recently, I had a client come into the office regarding this very issue.  The employer is “downsizing” and this client found himself included in the layoff.  As with anyone else in this situation, the client’s emotions ran from anger, to sadness, to anxiety over how to continue to provide for his family.  By the end of the consultation, I am happy to report that we were able to help lessen some of that anxiety simply by explaining to him what rights he has, and what rights he maintains even by signing the severance agreement he had been offered.  Specifically, we discussed his rights to unemployment compensation as it pertains to his involuntary termination (ie. Layoff).  Since severance payments are not considered “earned wages” under the unemployment statute, this client was able to find solace in knowing that he could still apply for unemployment benefits.


As an added bonus, we were able to successfully negotiate with the employer to increase the severance.  From my experience, most employers expect employees to negotiate a severance to some extent.  This particular client had worked with this employer for just under ten years.  He was an exceptional employee according to his performance reviews, and had never received a written reprimand.   The severance offered to him was five weeks.  The client was hoping to increase that severance to ten weeks (one week for each year worked).  With some work, good facts on our side, and a little ingenuity, we were able to bring the employer to the table for the negotiation.  Results will always vary in negotiations, and there can certainly never be any kind of a guarantee, but in the end we were able to increase this client’s severance to fifteen weeks. 


I said it earlier, but I want to reiterate it again here at the end.  If you have been fired, laid off, or otherwise involuntarily terminated from your job, and you have been offered a severance agreement, it is always a good idea to have that agreement reviewed by an attorney so you can learn what your rights are.  At the Law Office of Stark and Heiner, we firmly believe that the only person who has rights is the person who knows what those rights are.