Employees Take a Stand – Paying Not to Play: Severance Agreements and Signing Away Your Legal Rights for a Final Paycheck

April 2nd, 2014

It’s Friday morning.  As usual, you show up to the office, grab a coffee from the break room, and fire up the computer to begin your day.  It’s been a long week but who cares – the weekend is in clear view and the cabin is calling.  Then, your boss pays you an unexpected visit and says one of the most dreaded phrases in the desk-jockeying game, “come see me in my office.”  To your surprise, a representative from Human Resources is already there.  Then it hits you like a ton of bricks – you’re being terminated.  Your head starts spinning and anxiety builds.  After the meeting you can barely recall what was said and really don’t care.  The one thing you do recall is the HR representative handing you a folder with a number of documents in it.  After going home and settling down, you actually open up the folder and find something titled “Separation Agreement and Release,” offering you eight weeks of pay.  Sounds like there is a silver lining in all of this, right?  The answer could vary wildly depending on your circumstances.

A severance package is typically an amount of money, and maybe some benefits, based on an employee’s weekly pay, plus years of service, offered at termination in exchange for the terminated employee signing away any legal rights related to the termination.  Before doing anything, it is paramount that you consult with an attorney.  Most law firms that represent wrongfully terminated employees are more than happy to offer a free consultation to make sure that you aren’t signing away valid legal claims.  Depending on your circumstances, those potential claims could entitle you to substantially more than what the employer offered.

Regardless of what your interests are, it’s important to take time to digest the offer before deciding what to do.   For employees over the age of 40, the Age Discrimination in Employment Act (ADEA) requires employers to give those employees 21 days to review a proposed severance agreement.  This 21-day review period, regardless of age, has become the norm for almost all proposed agreements.

After consulting about the details of your termination, a lawyer will advise you on the possible existence of a claim against your employer.  If a claim is there that you decide to pursue, and the lawyer is willing to take you on as a client, you will typically sign a fee agreement with the firm and it’s off to the races.  But you’re probably asking yourself, what if I don’t have a legal claim and the circumstances of my termination are truly run-of-the-mill?  Can I still go ask for more?

The answer is absolutely!  Most companies expect employees, especially ones terminated through no fault of their own, to do exactly that.  And remember, do not feel bad asking for more.  For the company, it always comes down to the bottom line, so why should your decision be any different?  Remember too, that you have a card to play.  Employers never want to be sued, which is why they are offering you this money in the first place.  Even if a lawyer has advised that you do not have a claim, it’s important that you hold that card close and never give any indication that you are aware of this.  Typically, a severance will not be pulled off the table when the employee asks for more because of this mutually beneficial exchange.

If there is one take-away, remember to never blindly sign away your rights in haste.  Some employers, especially if they know an employee may have valid claims, will attempt to bulldog the employee into signing the agreement during the termination meeting or set an unreasonably short deadline. Resist these unfair and unreasonable tactics and ask for time to decide what to do!  You have rights to protect and should be allowed to consult with legal counsel.

Halunen-8736- Ross SmallRoss Stadheim is a lawyer with Halunen Law. He regularly advises and represents employees who have been terminated and offered severance agreements.