In the event that your position is eliminated or you are otherwise terminated from your position, many companies will offer a severance package in exchange for you executing a release of all claims that you have or may have against your employer. In the event that you are being terminated, or even if you hear that layoffs or termination are possible, you should obtain copies of all company policies regarding severance, speak with colleagues regarding what severance has been paid to others and consult with an attorney to discuss what can be done to improve your employment situation. Your ability to negotiate a suitable severance agreement depends upon your preparation leading up to termination.
Severance agreements typically provide at least a 21 day period of time in which you may consider the agreement and then a shorter period of time (frequently up to 7 days) in which to rescind your severance agreement. These “cooling off” periods are designed to prevent employees from entering into a severance agreement and then arguing that they were forced under duress to sign the agreements. Remain professional and respectful during any termination meetings and gather as much information as possible that may be helpful when attempting to negotiate for additional severance.
Severance payments are typically calculated formulaically at a rate of one-to-two weeks per year of employment with the company with high-ranking executives typically being entitled to more protections than rank-and-file employees. In the event that a large number of employees are being laid off, you may be entitled to at least 90 days WARN ACT notice, or the equivalent in severance pay.
When attempting to negotiate for additional severance, it is important to evaluate the potential claims that you may have against your employer. Questions that you should consider include:
- Why were you chosen for the layoff?
- Were you chosen based on any protected category (i.e., based upon your age, gender, nationality, religion, ethnic background, sexual orientation, disability, etc.?).
- Do you have a potential wage & hour claim against your employer?
- Were you a whistleblower now being terminated based upon your report of illegal activity?
- Do you maintain especially close relationships with customers or key business partners for which the company may compensate you to ensure that you do not say anything harmful to the company?
While employees are not allowed to extort their former employers in an effort to maximize their severance (i.e., you are not permitted to threaten criminal or regulatory prosecution to maximize your severance), companies are wise to pay employees substantial severance in order to release causes of action such as discrimination, harassment and wage and hour violations. The vast majority of companies would prefer to negotiate additional severance rather than face a lawsuit for discrimination, harassment, or unpaid wages. Severance agreements also serve to ensure that former employees keep the term of the separation confidential, maintain the confidentiality of company business, and do not disparage the company.
It is important to contact an attorney early on during the termination in order to negotiate the largest severance possible. Contact the attorneys of Pelton & Associates PC today to discuss a severance package review and potential negotiations.
Please note that based upon the time that it takes to review severance agreements, and to discuss potential claims with our clients, we are typically unable to provide a free severance package review. We are happy to provide a brief telephone consultation regarding your situation, but most in-depth severance package reviews are performed on a flat-fee basis. In the event that we believe that additional severance is appropriate, we may be able to negotiate the additional severance on a contingency-fee basis.