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New Jersey And New York Attorneys Watching Out For Your Best Interests In Severance Agreements

A severance agreement outlines the terms and conditions of an employee’s separation from a company. Many employers use severance agreements to avoid potential liability that may arise from terminating an employee. The employment law attorneys at our firm, Fisher | Taubenfeld LLP, can help employees ensure that the agreement supports their interests and their long-term opportunities.

Common Elements Of Severance Agreements

In exchange for giving an employee a severance package, an employer may require the employee to sign an agreement that includes restrictive covenants and/or releases the employer from liability for various legal claims that may be brought by the employee. Understanding the typical elements included in a severance agreement can help employees navigate their exit and ensure they receive fair treatment.

Some common components include:

Compensation: This is the pay the employee will get when they leave. It might be a one-time payment or their regular salary for a set time.
Benefits: Severance agreements typically address continuing benefits like health insurance, retirement plans and stock options. It will say how long these benefits last and any rules the employee must follow.
Confidentiality clauses: These clauses stop the employee from sharing private company information. This might include proprietary data, trade secrets or details about the severance agreement.
Noncompete provisions: Employers use these clauses to keep the employee from working for a competitor or starting a similar business for a certain time after leaving. These provisions must be reasonable in scope and duration.

What Should You Know Before Signing?

Before you sign a severance agreement, take the time to really understand what it says and what it means for you. First, look at the money they’re offering you. Make sure it matches what others in your industry get and reflects how long and well you’ve worked at the company. Also, check if you will continue to get benefits like health insurance and retirement plans, and if so, review the requirements for each.

It is also important to look at any confidentiality and noncompete rules to make sure they are fair and don’t stop you from getting another job in the future. This can help you understand the ways that this agreement could impact your future.

Talking to an employment lawyer might help you understand the legal terms and make sure the agreement does not infringe upon your rights. Also, check if the agreement stops you from taking legal action for any problems you had at work. By considering these details, you can protect yourself before you sign the severance agreement.

Tips For Severance Agreement Negotiations

Negotiating a severance agreement can help you secure terms that benefit you. Some ways to approach this process effectively include:

Know your worth: Understand your value to the company by considering your contributions and length of service. Use this information to negotiate for fair compensation and benefits. Research industry standards to ensure you’re asking for a reasonable package.
Carefully evaluate the offer: Take the time to carefully review the initial offer. Look beyond the financial compensation and consider other aspects like benefits continuation, outplacement services and references. Ensure all parts of the offer align with your needs and future plans.
Call a lawyer: Consulting with an employment lawyer can provide valuable insights into the agreement’s terms and help you identify areas for negotiation. A lawyer can assist you in understanding complex legal language and ensure your rights are protected.
Communicate clearly: When negotiating, communicate your needs and concerns clearly and professionally. Be open to discussion and willing to compromise on certain terms to reach a mutually beneficial agreement.
Focus on future opportunities: Consider how the severance terms might impact your future career. Ensure noncompete clauses or confidentiality agreements do not restrict your ability to find new employment or pursue opportunities in your field.

By taking the right approach during the negotiation process, you can secure a severance agreement that supports your financial and career goals.

What Makes An Enforceable Severance Agreement?

For a severance agreement to be enforceable, both the employee and the employer must agree to the terms in a clear and fair manner. The agreement should include something of value for both sides. Both parties should sign the agreement willingly without feeling forced or pressured.

The agreement must also follow the law. This means it should not include anything illegal, like unfairly stopping someone from working in their field. The rules about noncompete clauses, for example, must be reasonable in terms of time and location. If the terms seem unfair or too strict, a court might decide not to enforce them.

Finally, the agreement should use clear language that both the employee and employer understand. If the document includes unclear terms, it might not hold up in court. Both sides should read the agreement carefully and consider getting legal advice to make sure everything is fair and clear. By doing this, they can ensure the agreement is enforceable and protects their interests.

Common Issues That Can Lead To Legal Disputes

Severance agreements can sometimes lead to disputes between employers and employees. Some common issues include:

Disagreements over compensation: One of the most frequent disputes involves the amount of severance pay. Employees may feel the offered compensation doesn’t adequately reflect their tenure or contributions.
Conflict over benefits: Employees may expect certain benefits to extend longer than what the agreement specifies, leading to disagreements about what was promised.
Noncompete and confidentiality issues: Employees might contest the scope or duration of noncompete clauses, especially if they feel these clauses unfairly restrict their ability to work in their industry. Similarly, disagreements can arise over confidentiality terms, particularly if they seem too broad or limiting.
Enforcement of terms: Disputes may also arise if either party believes the other has not upheld the terms of the agreement. This could involve claims that the employer did not provide the agreed-upon compensation or benefits, or that the employee violated confidentiality or noncompete clauses.

Seeking legal advice can help address issues and ensure that the agreement is fair and enforceable for both sides.

Contact Fisher | Taubenfeld LLP

It is important to consult with an attorney before signing a proposed employment or severance agreement, particularly where the agreement includes restrictive covenants or asks you to waive your right to bring legal claims. Thankfully, skilled legal guidance is just a phone call or email away. Reach out online or call 646-741-3490, to speak with a member of our team in a no-cost, confidential consultation.