By Mark Carey
Whether or not you use an employment attorney to review and negotiate your employment severance agreement, you need to know the mechanics of the agreement. The following discussion will go in depth and explain the legal terms in an understandable way. If you need further information on severance negotiations, we have written about severance agreements and negotiations in previous articles, read HERE and HERE.
Generally, all severance agreements accomplish one task, paying employees to release their claims against the company in exchange for money and confidentiality. I have seen thousands of these agreements in my twenty-five years of practicing employment law for employees and executives. They are all relatively the same in the terms, but differ in their layout. Most law firms use the same template, so I see the same agreement used over and over again.
The Intro Paragraphs
The initial paragraphs of every severance agreement identify the parties to the agreement and include a couple of “Whereas” paragraphs. The “Whereas” paragraphs are prefatory and not required in any agreement. I usually strike them as irrelevant.
The Non-Admission Provision
Every severance agreement includes a provision that the employer is not making an admission of wrongdoing, even though the employer’s actions were objectively discriminatory or wrongful. A non-admission provision is standard, but to the newly terminated employee, this provision seems awkwardly strange given the employee’s experience leading up to the termination.
The “Show Me the Money” Consideration Provision
Consideration or aka the payment provision. Well, for employees this is the most important provision in the agreement—what they will be paid to release their valid claims against their employer. It is important to consider the following structure when drafting the consideration or payment provision. First, all money paid to an employee to settle an employment case is taxable as income. Second, you can split the settlement payment into parts to take advantage of tax planning. The employer will also like this option too, as they pay less in FICA. We normally allocate 60% as 1099 income and 40% as W-2 income. This allows you to receive a larger lump sum as less taxes are deducted. The employer will require you to indemnify the employer if and when the IRS challenges the settlement agreement Form 1099 payments. In reality, I have never seen nor heard of the IRS conducting audits on client settlement agreements.
Attorneys’ Fees are Tax Deductible Against Gross Income
Remember, if you spent hard earned income on attorneys’ fees pursuing employment discrimination claims only and you received a judgment or a settlement in your favor, you can deduct the total amount of the attorneys’ fees against your gross income on your Form 1040. You can only take this deduction for the year in which the case settled or judgment occurred. See the attached link below. This is a crucial element to your decision to accept settlement, as most employers refuse to pay for your legal fees to get to a settlement. You are not alone if you never knew about this important IRS regulation. We regularly advise clients about this deduction, but it is recommended you speak to an accountant for tax advice. https://turbotax.intuit.com/tax-tips/tax-deductions-and-credits/can-i-deduct-legal-fees-on-my-taxes/L98fUeOrM
General Release of All Claims
When employers pay severance in exchange for a signed release, the general release provision is the primary provision most employers are concerned about. This provision effectively identifies every conceivable claim, known or unknown, that the employee has and then causes the employee to waive all such claims. Most severance agreements set forth a long laundry list of state and federal statutes the employee is agreeing to waive claims under. However, some claims can never be released in a written severance agreement, as state and federal laws prohibit such waiver of claims. For example, you cannot waive and release the following claims: (1) workers compensation; (2) unemployment insurance claims and (3) claims made to any self-regulatory government agency such as the Securities & Exchange Commission (SEC).
Challenge to Agreement or Enforceability
Most severance agreements contain a provision that if you seek to challenge the enforceability of the agreement, you have to return the money. That seems fair and it is. But some employers also sneak in penalty provisions in case the employee breaches the agreement for speaking out about the settlement etc. Employers often seek the total value of the settlement or some six figure amount to protect the employers in case the departing employee goes rogue and publicly denounces the employer on social media platforms. This penalty provision often shows up in cases where there is a lot of bad blood spilt between the parties, particularly after a lawsuit is filed. We strongly advise clients against these draconian provisions and inform employers they are overreaching and are already protected by non-disparagement clauses and employee confidentiality agreements previously signed at the start of employment.
No Other Amounts Are Due
Employers often place a redundant provision in the agreement that the company does not owe the employee anything more. I say redundant because the release provision should have covered every claim under the sun.
Every severance agreement contains a non-disparagement clause, but one only applicable to the employee and not the employer. We advise clients to include a mutual non-disparagement clause to be signed by the employer so it does not engage in blacklisting, which is a very real phenomenon. You will need to name specific individuals and managers when negotiating a mutual provision, as employers object to having to police their entire workforce. I personally never liked that response, but hey, these are called negotiations for a reason—you don’t get all the things you want and must compromise or litigate.
References and Employment Verification
Contrary to urban legend, employers do not provide references to departing employees. What they do provide is a 1-800 number to confirm your employment and title, but nothing more. If you have a good reference still within the company, I suggest you get that in writing or have the person contact your new employer directly.
No Future Employment
Most if not all severance agreements contain a provision that bars you from obtaining employment with the company, or its’ subsidiaries, in the future. Yes, this is perfectly legal. What the provision really accomplishes is that it prevents future liability by the company in the event you re-apply for a position and claim you were somehow discriminated against for a failure to hire. If you asserted claims against the company prior to termination or thereafter, be reasonable with yourself and do not expect the company will want to rehire you. Consider yourself “canceled” by your old employer.
Return of Company Property
Severance agreements require you to return company property upon your termination or before you receive your severance payment. You would be surprised by the number of times I have had to explain what is and is not company property to former or departing employees. I often use the example of company email; you know the one containing your corporate email address. Well, the email and the piece of paper it is printed on do not belong to you. So if an email does not belong to you, everything else the employer gave you to do your job also does not belong to you. My biggest concern arises when the employee tells me he wants to hold onto the hard drive he purchased that contains the company email list, client list, power point presentations and any other corporate proprietary information. All of the above company property must be returned to the employer or you risk getting sued for theft, conversion of property etc. and risk breaching your severance agreement and returning the money paid to you under that agreement.
Entire Agreement or Full Integration Provision
This is a standard term in all well drafted employment agreements, including severance agreements. Essentially, the only terms of the agreement are those terms set forth in the severance agreement. Any oral or written agreements made prior to the full execution of the severance agreement are nonbinding and unenforceable. So be careful in your review of your case so that you do not hold expectations that are not realistic. You would need to have an employment attorney evaluate a prior oral agreement to determine if it is viable prior to signing the severance agreement. Some employers have promised severance prior to the severance agreement but then walked back those promises. Again, an employment attorney can help you dissect this important legal issue. You may discover that your employer created a severance plan of one person—you.
Non-competition and Non-solicitation Provisions
We often see employers sneaking into severance agreements brand new non-competition and non-solicitation provisions where none previously existed during the employee’s employment. We advise clients to strike these provisions and most employers do not raise the subject again. As employment lawyers, we see this tactic used every day, but you do not. This is one example where you should involve an employment attorney to review your agreement, whether helping to negotiate it with the employer or from behind the scenes. We also see employers reaffirming the prior noncompetition and non-solicitation provision signed at the start of employment into the severance agreement. Again, we advise clients to challenge the inclusion and enforceability of these restrictive covenants. Most employers will back away once they are met with a good argument as to why the prior agreements are unenforceable.
Agreement Signed In Counterparts
It is common to include a provision that the parties to a severance agreement can sign in separate counterpart copies, each of which will be considered one fully executed agreement. Counterparts are exchanged via email and facsimile, as well as in person.
21 Days to Sign or Else
Don’t panic if you have not signed your agreement within the 21 days, as spelled out in the “proposed” agreement. There is no state or federal law that states you have 21 days or 45 days to sign the severance agreement. If the agreement is not signed by you, do you think you have an enforceable contract? No. So, ignore the 21 or 45 day threat and just speak with an employment attorney to discover what claims or leverage you have to increase the severance amount. Often times, consulting with an employment attorney will pay off in huge dividends to you in the form of a much higher settlement value at the conclusion of the negotiations. The difference or delta here is the employment attorney. She or he has the professional experience you lack, and it is that experience and knowledge of the law that is applied to your narrative to develop claims that stick against your employer. As you read above, your legal fees are 100% tax deductible, so why wouldn’t you explore your potential claims with an employment attorney?
I saved the best for last. Of course everyone knows that you give up your legal rights in a severance agreement, but many do not know you also agree to a “lifetime” of silence. No, you cannot write a book about your horrible employer if you agree to take their blood money! But the reason why I saved this topic for last is because of recent social and legal developments. The #metoo event and the aftermath that followed brought with it a new understanding about confidentiality agreements, also called nondisclosure agreements (NDAs). The social issue that has arisen is that we are no longer comfortable letting the bad actors of the world get away with their misdeeds, in particular any misdeed of a sexual nature—regardless of gender or sexual orientation, by covering them up with confidential settlement agreements. Think of Harvey Weinstein or the former Met Opera conductor James Levine. For decades and continuing today, every single employer requires the departing employee sign a confidentiality provision in a severance agreement in exchange for severance payments. This is the default rule followed by all employers. This default rule has only caused more employees to be harmed by the same bad actors who caused the previous cases that eventually settled.
Many states like New York have created statutes requiring a voluntary confidentiality agreement, separate and apart from the settlement agreement. While this sounds like a good idea, it has already been abused by employers. Most employers will now apportion a part of the settlement payment to be exchanged for a signed confidentiality agreement. Simply, the legislators were lobbied by employers and should have banned the use of settlement dollars in exchange for signed confidentiality agreements.
The bottom line for you is this. We are just not at the social pivot point for you to resist the use of confidentiality provisions in settlement agreements, so don’t waste your time arguing about this issue with your former employer. But one day confidentiality provisions in employee severance agreements will be banned as a matter of statute and public policy. This is a nonpolitical issues, as both liberals and conservatives use confidentiality agreements to conceal the illegal misdeeds of their managers and employees.
If you need more information about this article or want to discuss your severance agreement with an employment attorney, please call Carey & Associates, P.C. at call (203) 255-4150 or email to firstname.lastname@example.org. Thank you and be safe and well.
By Chris Avcollie,
In an often-quoted line from the hit TV series Dexter, actor Michael C. Hall, who plays the title character said: “There are no secrets in life; just hidden truths that lie beneath the surface.” For those of us involved in the resolution of employment claims on behalf of employees, this quote has special meaning. Beneath the surface of most employment settlement agreements lie the undisclosed facts that led to the conflict and which often result in the messy end of an employment relationship. Recently proposed legislation in California seeks to ensure that those “hidden truths” do not remain hidden.
California Proposes New Law – Silence No More Act (SNM Act)
A new law proposed in California this week called the Silenced No More Act (SNM Act) is intended to prevent the enforcement of non-disclosure provisions in a wide variety of employment settlement agreements. The legislation, proposed by California State Senator Connie M. Leyva, will expand upon the 2018 STAND Act (Stand Together Against Non Disclosure) and will protect plaintiffs in cases of employment discrimination and harassment of all kinds who choose to speak out publicly about their experiences. Under the current provisions of the STAND Act, only plaintiffs in cases of gender discrimination or sexual harassment may avoid non-disclosure provisions. The new law will expand the STAND Act to prevent the use of non-disclosure provisions in employee severance agreements. Under the SNM Act, targets of discrimination based on race, national origin, religion, or gender identity will also now be free to ignore the contractual gag orders companies negotiate into their settlement agreements.
This legislation has been supported by employee rights groups in California including the California Employment Lawyer’s Association and the Equal Rights Advocates. The new laws are seen as an end to the days when employer misconduct can be hidden from public view. Workers who have been targeted with harassment and discrimination will be free to speak their truth publicly. The perpetrators of this type of misconduct can no longer hide behind the veil of secrecy provided by their company. Non-disclosure and non-disparagement agreements will no longer be used to silence employees. The hope is that the public disclosure of the details of these abusive work environments will prevent perpetrators from targeting other workers in the future.
STAND and SNM Could Influence Other States to Pass Similar Laws
Although STAND and SNM (if it is enacted) are or would be exclusively California laws, these statutes could ultimately have a broad national impact. Other states often follow California’s lead in employment matters. Further, the fact that so many large technology companies are headquartered in California gives these laws an outsized influence on the national conversation about non-disclosure agreements. In the wake of the STAND Act, a number of states have enacted some limitations on non-disclosure enforcement including Washington, New York, New Jersey, Vermont and Tennessee. Many more states are likely to see some version of this legislation in the future.
More Cow Bell – More Corporate Disclosure and Shaming = More Equality in the Workplace
As am employment attorney, I was very curious about how this new legislation might impact the ability of plaintiff’s lawyers to negotiate settlements for clients in employment discrimination cases. Often the best leverage plaintiffs have in the early stages of an employment case is the prospect of public disclosure of misconduct on the part of a company employee or manager. The reason many companies offer settlements to claimants is to avoid embarrassing public disclosures of uncomfortable truths about their corporate culture or work environment. Companies also have an interest in keeping settlements secret to avoid what they see as “encouraging” other claimants looking to “cash in” on potential claims. In other words, the concern is that the non-disclosure and non-disparagement provisions outlawed by the STAND Act and the SNM Act are the best tools to obtain fair settlements for employees who have been targeted with harassment or discrimination.
The STAND Caveat
Further examination of the proposed statute reveals that its scope is more limited than I had anticipated. These statutes are actually structured to encourage and not to discourage early settlement of discrimination cases. The STAND Act allows for use and enforcement of NDAs (non-disclosure agreements) in cases where there has not yet been any court or agency filings. So during the initial stage of the claim, when a demand letter has been issued but where claims have not yet been filed with state or federal human rights agencies (such as the Equal Employment Opportunities Commission or “EEOC” in federal discrimination cases or the Connecticut Commission on Human Rights and Opportunities or “CHRO” in Connecticut state discrimination cases) and no lawsuit had been filed, the companies may include NDAs in settlement agreements and they are enforceable.
This exception to the ban on NDAs is highly significant. Far from discouraging early settlements of discrimination claims, this feature of the proposed law offers employers a powerful incentive to settle employment discrimination and harassment claims early. If an early settlement is not reached then the agency filings will occur and the employer will lose the right to demand an NDA as part of the settlement agreement. In order to keep employee misconduct secret, employers will have to settle employment discrimination cases early and often. While some cases can be kept secret by early settlement negotiations, targets of discrimination who want to shed light on their experience can ensure their ability to speak out by filing their claims with state and federal agencies.
What Opponents/Management/Defense Attorneys Say About Anti-NDA Legislation
Opponents of the anti-NDA legislation contend that restricting NDAs takes away a survivor’s choice to keep their case private and provides a strong incentive for employers to refuse settlement options and to defend themselves against a publicly disclosed allegation. According to Attorney Jill Basinger, an entertainment litigation partner and Michael L. Smith an associate at Glaser Weil in Los Angeles, “This harms survivors of sexual harassment and assault by removing their choice and forcing them to endure the hardship and uncertainty of a public trial as the only means of vindicating their claims.” Once an agency filing occurs or a lawsuit is commenced, the NDAs become unenforceable. It seems as if these laws would remove a strong incentive for defendant employers to settle claims.
It appears, however, as if the STAND Act has resulted in an increase in pre-filing mediations in employment cases in California. According to Mariko Yoshihara, the Legislative Counsel and Policy Director for the California Employment Lawyer’s Association, the predictions and fears over the STAND Act impairing the ability to settle have not borne out. According to Attorney Yoshihara, attorneys involved in this type of litigation have informally reported that the legislation has not lowered settlement amounts or impaired the settlement process. Additionally, according to Yoshihara, it has made it easier to advocate for employee rights from a public policy perspective because the targets of harassment and discrimination can make their stories public. While dispositive data on this point is not yet available, it seems as if the legislation is working in California.
Further, fears surrounding the forced public disclosure of the identity of the claimant are unfounded. Under the STAND Act there are specific provisions which protect the identity of the complaining employee in the context of a lawsuit. The STAND Act includes a specific provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including documents and pleadings filed in court, at the request of the claimant. California Code of Civil Procedure 1001(c). Thus, the anti-NDA legislation does not force the disclosure of a claimant’s identity.
While many employer advocacy groups including various chambers of commerce and industry and trade associations have opposed legislation such as STAND and SNM, similar legislation should be considered by all state legislatures that have not already enacted similar laws. When it comes to use of NDAs in employment discrimination and sexual harassment cases there is an unfair imbalance of power between the bargaining parties. The employers who are often defending the harasser or denying that the harassment occurred have an overwhelming advantage over the complaining employee in terms of investigative, legal, personnel, and financial resources. Employers are frequently holding all of the cards in a settlement negotiation. Legislation such as STAND and SNM will help to level the playing field at least with respect to NDAs.
More Power to the People/Employees – Shift In the Balance of Power
Placing the power over which aspects of the case can or will be made public in the hands of the targets of harassment and discrimination will help balance the power in the arena of employment settlement agreements. As evidenced by the initial success of the STAND Act, these laws can be an important tool in ending the culture of silence that has permitted harassing and discriminatory behavior to continue in the workplace for so long. In a recent opinion piece, the feminist writer and critic Marcie Bianco said: “If the societal change necessary for dignity and justice is to occur, we must move from awareness to accountability.” This legislation should help bridge the gap between awareness and accountability. We need to see a whole lot more of those “hidden truths” lying beneath the surface of the American workplace.
If you would like more information about this article, please contact Carey & Associates, P.C. at email@example.com or call 203-255-4150.
 Basinger, Jill and Smith, Michael L.; “How California’s NDA Restrictions Cause More Harm Than Good for Survivors” (Guest Column); Hollywood Reporter; https://www.hollywoodreporter.com/news/how-californias-nda-restrictions-cause-more-harm-good-survivors-guest-column-1280922
 LeHocky, Mark, “Shining a Needed Light on Harassment and Discrimination Claims: The Collective Benefits from California’s Recent Secret Settlement Restrictions”, Contra Costa County Bar Association, March 2020; https://www.cccba.org/article/shining-a-needed-light-on-harassment-and-discrimination-claims/
 Bianco, Marcie, “Britney fans angry at Justin Timberlake have a point.” CNN Opinion, February 10, 2021.
1. THINK OF YOUR SEPARATION/SEVERANCE OFFER AS A NEGOTIATION.
2. REVIEW WHAT YOU ARE BEING OFFERED – USUALLY MONEY.
3. CONFIRM THAT YOU ARE BEING OFFERED EVERYTHING YOU ARE ENTITLED TO
4. ASK FOR A COPY OF YOUR PERSONNEL FILE – YOU ARE LEGALLY ENTITLED TO IT.
5. CONFIRM WHETHER YOU HAVE AN ERISA GROUP BENEFITS PLAN WHICH COULD INCLUDE SEVERANCE BENEFITS.
6. CONSIDER WHETHER YOU MIGHT HAVE ANY LEGAL CLAIMS AGAINST YOUR EMPLOYER.
7. REQUEST TO BE RELEASED FROM ANY NON-COMPETE, NON-SOLICIT, OR OTHER RESTRICTIVE COVENANTS (IF ANY APPLY TO YOU)
8. REVIEW NON-DISPARAGEMENT PROVISIONS AND ASK THAT THEY LIKEWISE PROTECT YOU.
9. CONTROL YOUR FUTURE REFERENCE.
10. ARBITRATION CLAUSES.
The Employee Survival Guide is a podcast only for employees. We will share with you all the information your employer does not want you to know about and guide you through various important employment law issues. The goal of the Employee Survival Guide podcast is to provide you with critical insights about your employment and give you the confidence to protect your job and career, especially during difficult times.
YOUR HOST MARK CAREY
The Employee Survival Guide podcast is hosted by seasoned Employment Law Attorney Mark Carey, who has only practiced in the area of Employment Law for the past 25 years. Mark has seen just about every type of employment dispute there is and has filed several hundred lawsuits in state and federal courts around the country, including class action suits. He has a no frills and blunt approach to employment issues faced by millions of workers nationwide. Mark endeavors to provide both sides to each and every issue discussed on the podcast so you can make an informed decision.
EMPLOYEE SURVIVAL GUIDE PODCAST IS LIKE NO OTHERS
The Employee Survival Guide podcast is just different than other lawyer podcasts! How? Mark hates “lawyer speak” used by lawyers and just prefers to talk using normal everyday language understandable to everyone, not just a few. This podcast is for employees only because no one has considered conveying employment information directly to employees, especially information their employers do not want them to know about. Mark is not interested in the gross distortion and default systems propagated by all employers, but targets the employers intentions, including discriminatory animus, designed to make employees feel helpless and underrepresented within each company. Company’s have human resource departments which only serve to protect the employer. You as an employee have nothing! Well, now you have the Employee Survival Guide to deal with your employer.
Through the use of quick discussions about individual employment law topics, Mark easily provides the immediate insight you need to make important decisions. Mark also uses dramatizations based on real cases he has litigated to explore important employment issues from the employee’s perspective. Both forms used in the podcast allow the listener to access employment law issues without all the fluff used by many lawyers.
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For more information, please contact Carey & Associates, P.C. at 203-255-4150, www.capclaw.com or email at firstname.lastname@example.org.
The content of this website is provided for information purposes only and does not constitute legal advice nor create an attorney-client relationship. Carey & Associates, P.C. makes no warranty, express or implied, regarding the accuracy of the information contained on this website or to any website to which it is linked to.
This episode of the Employee Survival Guide discusses a very important topic of how to negotiate a severance package with your employer. Your host Attorney Mark Carey will run you through his tactics and strategies of how to negotiate a successful severance agreements. Mark’s knowledge covers more than 24 years negotiating severance employment agreements for employees and executives.
For more information about this topic, please contact our employment attorneys at Carey & Associates, PC at 203-255-4150 or email to email@example.com. Thank you for listening.
A record 22 million people were laid off in one month since the coronavirus pandemic shut down large portions of the U.S. economy as of the week ending April 16, according to the Wall Street Journal. The estimated current employment rate is 13.5%. But were all those layoffs really due to the corona virus or did employers use the pandemic as cover to get rid of employees for other reasons, maybe unlawful reasons. This is the big question many unemployed Americans are now asking. Please review the following frequently asked questions and see which applies to you.
FAQ: Were you recently furloughed, laid off, demoted or terminated due to COVID, but your co-workers remain employed?
FAQ: Is your Employer still operating and profitable, yet you were laid off or had your compensation reduced due to a business decision to reduce costs or eliminate your job position?
FAQ: Were other younger employees retained, while you were furloughed, laid off, demoted or terminated?
FAQ: Were you laid off or terminated and not offered any severance or insufficient severance?
FAQ: Were your unemployment benefits interfered with?
FAQ: If you were unable to continue to work because you were sick, because a family member was sick or because you have young children at home, were you permitted to take FMLA leave or were you instantly laid off or terminated?
FAQ: Were you the only one furloughed, laid off, demoted or terminated or due to COVID, even though your Employer is calling it a “reduction in force”?
FAQ: Do you think your Employer was looking for an excuse to get rid of you?
If you answered yes to any of the above, your seemingly straightforward COVID-based termination may be unlawful. Unfortunately, the majority of Employees in the U.S. are “at-will”. This means that employees are at the absolute and arbitrary whim of their employers and they may be demoted, terminated or otherwise treated adversely for any reason or no reason at all. The exception to the anything goes rule of an at-will employment arrangement is that employees may NOT be treated unlawfully.
If you have recently suffered an adverse change in the terms and conditions of your employment amidst the COVID-19 crisis, you may still have viable claims against your employer for unlawful or wrongful treatment. COVID-19 is not and should not be a catch-all excuse or defense for employers’ bad behavior and even a crisis of this magnitude does not relieve employers of their obligation to treat employees lawfully at all times. If something does not feel right to you about the circumstances of your change in employment, it is prudent to speak to an employment attorney and review the fact pattern surrounding your work situation. It is in your best interest to discern whether your employer may be using COVID-19 as a sham or cover for otherwise unlawful behavior.
Unlawful or wrongful acts that may entitle an employee to monetary damages for claims against their employer will usually fit in one of three scenarios. Employers actions can be shown to be unlawful if they:
1) violate or fail to comply with any legislative mandate, act or
2) breach a valid contract or agreement; or
3) discriminate, harass or retaliate based on a protected class trait.
COVID-19 does not give employers a green light to violate laws, ignore contracts or discriminate against employees, and a termination under any one of those scenarios might be a wrongful one.
Scenario 1 – Statutory Violations:
Employers must abide by all existing laws and statutes, especially as they apply to the COVID-19 pandemic. It is the employers’ obligation to stay abreast of and comply with all new mandates imposed and legislation enacted in response to COVID-19, including, but not limited to enhanced FMLA, the CARES Act and the expansion to the Unemployment Compensation Act. This is in addition the existing laws that have long protected employees from discrimination and retaliation such as Pregnancy, Sex Harassment, Sexual Stereotype, Disability, Age, Whistle Blowing and Family Medical Leave, to name just a few. Thus, any analysis of whether your termination was lawful and proper should begin with a review of the facts relative to the controlling law and any revisions and updates to those laws. If you identify any facts in the events leading up to your termination that just do not seem right, you may have uncovered the hidden basis for your termination. For example, you got a good review last fall and received a bonus in January, but in March you were terminated without explanation. The small window between the January bonus and March termination should be closely examined for any facts supporting bogus performance issues, favorable treatment given to other employees and not you and replacement by coworker who is substantially younger and lesser qualified. The examples are endless, but you get the gist. See further discussion below.
Scenario 2 – Breach of Contract:
Even an at-will employment arrangement must be considered in light of any existing employment contracts or agreements between the employer and employee. In addition to or in the absence of a formal written employment contract, Courts may look to such documents as offer letters, on-boarding communications, employee handbooks, published severance plans and emails in order to demonstrate the existence of any enforceable covenants between the parties that may speak to such topics as causes for termination, compensation, bonus, healthcare, long term incentive compensation and severance. Thus, where a valid contract can be established as to any of your employment terms, your employer is bound by those terms and any deviation may be an unlawful breach for which you might be able to seek and recover damages. So, if you have been terminated or otherwise caused to separate from your employer, even if you are at-will and even amidst the COVID-19 crisis, it is imperative that you review all of your documents in order to discern that you are being treated lawfully according to the terms that were agreed upon and promised to you.
Scenario 3 (THIS IS THE BIGGIE) – Discrimination Claims:
Even if you are an at-will employee who was let go as a result of COVID-19, you may still have a claim for wrongful termination against your employer if their decision to let you go was at all based on discriminatory motives. Discrimination is unlawful and where an adverse act is taken against you because of such protected traits as your age, gender, pregnancy, race or national origin, disability, perceived disability, associational disability or sexual orientation, you may have legal claims against your Employer.
In the absence of direct evidence of discrimination or the smoking gun as we call it, discrimination can be shown if you are a member of the protected class and you were treated adversely (demoted, furloughed, laid off or terminated) under circumstances which give rise to an inference of discrimination, i.e. circumstances that show discrimination was the substantial motivating reason for the adverse act taken against you. The way an employer can defend itself against such a claim and rebut that inference is to show that there was a “legitimate” lawful reason for the termination, such as performance issues and other cause such as a business decision or reduction in force.
Certainly, you can all see where this is heading. COVID-19 and the related financial fallout provides your employer with the legitimate business reason it needs to “lawfully” terminate you. However, this cannot be accepted at face value. In fact, if you are able to show that the supposed legitimate reason relied on by employer was a sham or cover for discriminatory motives, you may prevail on your claims against them in a severance negotiation. There are surely many situations where an employer, especially during these challenging economic times, needs to make a tough business decision to lay off employees or institute a reduction of force, and where their decision to do so is legitimate and truthful.
Employer May Have Used Covid-19 As An Excuse to Fire You
However, there are also many instances where certain employees are selected within the context of a business decisions, based on discriminatory motives. For example, the company makes the “business decision” to lay off only the older employees, or only the female employees or only the pregnant employees. In addition, there might not even be any explicit or formal business decision to reduce costs or a effectuate a reduction in force, but your employer may still feel safe engaging in discriminatory behavior knowing or hoping that any terminations taking place now will be viewed as a necessary and legitimate, due to the Covid-19 business climate. Again, we cannot allow employers to use this catch-all defense to what maybe culpable and unacceptable discriminatory behavior. If you see something, say something to an employment attorney.
There is no doubt that both employers and employees are presently finding themselves in the most difficult and tenuous circumstances. However, employers, in response to COVID-19, seemingly have absolute power and new founded legitimacy to make discriminatorily targeted employment decisions against their at-will employees, under the guise of a business decision. And this is very concerning and unlawful. If you are in a protected class because you are over the age of 40 or fall into any of the other class of protected traits discussed herein, and have seen a change to your employment that you do not believe was made as the result of a good faith business decision, cost reduction, reduction in force in response to COVID-19, or other legitimate basis, we encourage you to speak to an employment attorney immediately. You may be entitled to reinstatement, severance or increased severance or settlement dollars relative to your discrimination claims for wrongful termination or other possible improper acts by your employer.
Carey & Associates, P.C. is currently providing complimentary consultations for potential new clients who are experiencing any employment related issues or believe they might have possible employment claims, as a result of the COVID -19 pandemic. Feel free to contact our office if you need help with that or any of your employment matters.
By Liz Swedock
COVID-19 is interrupting everyone’s lives these days, worldwide, and for many of us it is negatively impacting our jobs. Even while we are trying to achieve the work-from-home revolution, an unprecedented number of workers are experiencing frightening job stressors, including drastically reduced workload, changes in job responsibilities, dropped job responsibilities, and job loss. While not every negative impact can be fixed, there are a few legal protections that all workers should be aware of.
Is your job being impacted in a way that is unethical, or possibly illegal?
The sad reality is that the global recession is going to quickly motivate employers to start firing people. Businesses are panicked right now about their financial bottom line, and those salaries for all the people who aren’t in the office are looking daunting. While it may be legal for employers to lay people off due to purely financial concerns, all employees should be their own watchdog for any layoffs, terminations, demotions, or changes in responsibilities that appear to be unfairly – or unequally – happening.
What is unfair or unequal? Often the answer is discrimination. These days most people are aware of the protected classes of employees. They include older individuals (over 40), disabled individuals (physical or mental), gender, race, national origin, religion, and others. It is illegal for employers to single out any of these classes of individuals for negative treatment.
It’s often not obvious if an employee is being illegally discriminated against, which is why workers should arm themselves with what to look for. Sometimes illegal mistreatment is blatant, such as bullying and inappropriate remarks. But it can also be done through much more subtle means, like removal of responsibilities, being taken off projects or sidelined, exclusion from important meetings, or old-fashioned favoritism.
We all know what’s coming. As the economy is disrupted, companies are going to be forced to start eliminating employees. So, keep your eyes and ears open and watch out for anything that seems wrong. Did an entire project get cancelled or an entire team laid off? That kind of activity might be perfectly legal. However, does it seem like only the older employees or those with medical conditions are suffering the consequences? Has your multi-gendered and multi-national team suddenly become, well, a lot less diverse? These types of selective actions could be crossing a line into illegal territory.
Are you being denied rights that you are entitled to, particularly medical leave or accommodations?
The headlines are warning us that a huge percentage of the population should expect to catch COVID-19, a/k/a Coronavirus. This means that an even larger number of people can expect to be impacted by the virus, including if family members get sick.
If you or an immediate family member gets sick, you may be entitled to take medical leave while your job is protected – meaning, you cannot be demoted or fired. Federally, the Family and Medical Leave Act (FMLA) guarantees employees up to 12 weeks of leave per year if you’ve been an employee for at least one year and worked a minimum of 1,250 hours over the prior year. FMLA leave is unpaid, which means your employer is not required to pay you while you are on leave, but is required to hold your job for you until you return. Any negative impact on your job, such as by giving your work away or demoting you because you took leave, is illegal.
In Connecticut, this protection is expanded to 16 weeks of leave for any employee who works 1,000 hours during the prior year. In New York, since 2018, employees may be entitled to up to 10 weeks of paid family leave, up to 60% of their average weekly pay. This is one of the strongest protections in the country.
Can you take FMLA leave any time you or a family member gets sick? For a simple illness, such as a cold or the flu, the answer is usually no. However, you are entitled to leave for any “serious health condition,” which is defined as “an illness, injury, impairment, or physical or mental condition” which involves “inpatient care” or “continuing treatment by a health care provider.” Sound confusing? It is. Put quite simply, it’s not a black-and-white rule about when legal protections kick in for any individual medical situation. The bottom line is that if you, or a family member, has a medical problem that requires repeated, or ongoing, medical treatment, you probably qualify for protected leave.
It’s also important to know that individuals can take this medical leave in pieces, or “chunks.” This is called “intermittent leave.” What this means is that if you qualify for leave, but you can work sometimes, you can still be eligible for the protections provided under these laws, most importantly that you cannot be fired or demoted while utilizing your leave. This is extremely important for people who have ongoing medical conditions that require short periods of treatment.
Lastly, every employee with a medical issue should understand how the law defines “disability” and what an “accommodation” is. Legally speaking, disabilities can be temporary! You can be legally disabled if you have a medical condition that “substantially limits one or more major life activities,” and “major life activities” includes working. Of course, this means that many people who qualify for FMLA medical leave will also qualify under the law as disabled.
So, what protections do you have if you are legally disabled? A complete answer here would require far more space and time than I’m tackling in this article. However, the short answer is that your employer is required to cooperate with you so that you can do your job. In legal terms, this is called an “accommodation.” If you can do your job with a reasonable accommodation, then it is illegal for your employer to fire you, demote you, or do anything else to hurt your employment.
Just like with medical leave, it’s different for each person. However, an example how these legal systems work might be something like this – Person A contracts Coronavirus. Unfortunately, person A has the aggressive symptoms of the virus and needs to be hospitalized for a week, and then required to quarantine at home for a few more weeks. While they are hospitalized, Person A would be entitled to FMLA (and state) leave while they are in the hospital, and, most likely, while they have to self-quarantine at home. At the same time, Person A would most likely also qualified as disabled. This means Person A would have the following protections: the employer has to hold Person A’s job while person A is out, and, while Person A is recovering, the employer is required to offer Person A accommodations so that Person A can do Person A’s job. In other words, Person A cannot be fired, and must be given options to enable Person A to perform the job.
The takeaway here is to know your rights and stand up for yourself! Don’t expect your HR department to know the law or give you good advice. Even the most well intentioned employers or human resources people often don’t know how this process works, or what they are legally required to provide to you. You need to speak to an employment attorney to get the right advice, especially now during this Coronavirus pandemic.
If you have questions or concerns about this article, please contact one of our employment attorneys at Carey & Associates, P.C. at 203-255-4150 or by email at firstname.lastname@example.org.
The issue is not if the Coronavirus will impact your employment but when it will. If you contract the Coronavirus or you are quarantined due to a family member having the illness, you need to know the following important pieces of information to protect yourself.
1. Having the Coronavirus is a Disability and You Are Entitled to Protections
If you are diagnosed with the Coronavirus, you will have a physical disability pursuant to state and federal law. Generally, any impairment of your major life functions is considered a disability and it appears that the Coronavirus is so severe it can become fatal in a short period of time. An employer who discriminates against an employee who contracts the Coronavirus may be liable under disability laws. Also, you should request a reasonable accommodation for a disability leave of absence to quarantine yourself and seek medical assistance. Your employer has an obligation to discuss your accommodation, albeit after they order you not to come to the office until you recover.
State and federal disability laws also protect employees who are “regarded as” having the Coronavirus but have not been diagnosed yet or do not even have the virus. The medical community has only indicated the early signs of the Coronavirus mimic flu symptoms and you will not know which illness you have until you have been tested. The idea here is that disability laws seek to address discriminatory biases held by employers who speculate a person has a disability but are unsure about the truth of the employee’s medical situation.
Finally, the disability laws also protect employees “associated with” individual family members who have the Coronavirus. If you are fired out of fear that your family member infected you, you are protected against discrimination and unlawful termination, even though you never contracted the illness.
2. You May Have Rights Pursuant to the Family Medical Leave Act
If you contract the Coronavirus, and you have worked a significant number of hours in the past year, you may be entitled to take time off, paid in some states like New York and soon Connecticut. You will be entitled to 12 weeks or more and your job will be protected. However, you have to come back to work before the expiration of the FMLA leave or your employer will terminate you. This leave of absence overlaps with the disability accommodation request above. A good an employment lawyer will know how to navigate this for you.
3. You May Be Entitled to Short Term and Long Term Disability Benefits
You may also be entitled to paid time off under your employer’s short term and long term disability benefits plan. Again, this disability leave of absence overlaps with the disability and FMLA leaves of absence. In order to qualify for benefits, you need to apply for them through your Human Resources Department and demonstrate, via supporting medical documentation, you are totally disabled. Given the severity of the Coronavirus, you will certainly qualify as having a total disability. The grey area will be in those cases where the symptoms of the virus are not as severe and you recover within a matter of weeks. If you recover, and hopefully you do, the STD and LTD benefits will only be paid for the period of your disability. You would need to return to work after your recovery, but an employment lawyer will guide you through this process.
4. You May Be Entitled to Workers Compensation
If and only if you contract the Coronavirus while at work, can you file a claim for workers’ compensation benefits. This type of claim takes longer to collect from the insurer, but more importantly, it may bar you from recovery under other state laws but not federal laws. Federal laws will always preempt state law claims.
5. You May Be Entitled To Severance If You Are Terminated
If you are terminated for contracting the Coronavirus, regarded as having the virus or associated with a family member who has it, you should consider hiring an employment attorney to attempt to negotiate a severance package with your employer. Your employer may already have a severance plan which pays out benefits, i.e. weeks of salary for years of service, and you will need to sign a waiver and release of claims, aka settlement agreement. An employer will want to avoid any connection to accusations that it fired an employee for having the Coronavirus; it just does not seem fair and the right thing to do.
If you would like more information about this topic and need to speak to an employment attorney, please contact Mark Carey at email@example.com or call Carey & Associates, P.C. at 203-255-4150.
By Mark Carey
What do you mean I can be fired for any reason or no reason at all? Who made up this rule? Why do I have to follow the employment at-will doctrine? Well, you don’t and there are several reasons companies and employees should shift to a modified approach that satisfies the expectations of both the employer and the employee.
I can honestly say that over the past twenty-three years handling employment law cases for both executives and employees, my clients are really confused and bewildered by the employment at-will rule and the significant financial impact it creates when employers decide to let them go. Many clients always state they understand the basic rule that they can be fired at any time and they can leave at any time. But beyond that they know absolutely nothing about why the rule came into being or more importantly how they can negotiate around it. When a termination occurs the adverse impact is clear, the uncertainty of the break in career trajectory and financial resources.
At the executive level, I routinely negotiate employment contracts that provide for termination “for cause” and “termination for good reason” by the executive. This is standard in the industry at the executive level. However, I do confront the hybrid cases, where the employer “shoves” in the provision identified as “termination for any reason”. Well, that sounds like the employment at-will rule doesn’t it, because it is. Enter the LeBron James Rule. (I made up this rule). When negotiating employment contracts, employees needs to identify their leverage factor; it is what makes the employer throw money or equity in order to induce the hire. LeBron James can write his own ticket to work wherever he finds the highest bidder, and he can demand the termination for cause and good reason provision with a severance payout. Find your leverage and do not be shy about asserting it.
Well you might say not everyone is as fortunate as LeBron. I disagree and this is what has bugged me for many years. We all too often knee jerk react and accept this stupid and ill-conceived rule that your employment is as good as the last minute or hour you just worked. Some say, just be grateful you have your job etc. Give me a break! There is a new way to handle this.
I propose getting rid of the employment at-will rule and replacing it with the modified form we see in executive employment contracts. Specifically, employees can be fired for cause or terminated by the employee for good reason. If the good reason event occurs, then the employer pays a severance amount to take care of some of the financial issues related to your transition to new employment. If you land a job, your severance stops, as this is fair in an economic theory way of thinking. “Termination for cause” means you violated the law and company policies. “Termination for good reason” means the employer materially changed your title, salary, reporting structure, location of your office etc.
Now here are several positive effects of eliminating the employment at-will rule based on my research into this issue.
- Management vs. Everybody: Eliminating the employment at-will rule will get rid of the large divide between management and employees. Literally, this is the trust divide. If you scare employees into believing they can be fired any time, management is not creating a loyal and trusting environment that spurs innovation and creativity which will push the company forward in profound economic ways. Employers want employees to be focused on their work, but this rule is utterly distracting and frankly non-motivating. The rule erodes any semblance of entrepreneurial creativity among the team. Employers need to seriously rethink this one.
- HR vs. Everybody: Honestly, did you really believe the Human Resources Department was there to help you. I make it my mission to point this out to every client I have. They (HR) have a duty of loyalty to the employer and have absolutely no interest in doing what’s right for you. By eliminating the employment at-will rule, employees will closer align themselves with HR and HR will do a better job of “caring” for the very employees that make up the company; without employees you have no company. Where did all those employers go astray?
- Eliminating Fiefdoms: Does your boss have their favorites? Do they hire from the last place of employment? Are there any “brown-nosers” in the team who believe the only way to the top is to “work it” what ever that means to you. It’s childish and it’s irritating to say the least. You know what I am referring to. Why do other employees do this and why do supervisors encourage it? Eliminating the employment at-will rule will breed meritocracy, but not the type Bridgewater Associates thinks they are creating. Employees will begin to feel compassion for their coworkers and work more closely as a team or family, instead of putting a knife in their back at work. Employees will work with management for the company common good; all will prosper together not just the few.
- Reducing Discrimination: If you create trust, honesty, transparency and vulnerability, then you create lasting relationships where employees want to stay and work. Employment discrimination bias arises from many reasons, but my theory is that if you get rid of the employment at-will rule you will gut the walls that employees build in their work environments with the sole goal of getting ahead. Think about it. If you say something or do something negative about another person to make yourself look better in the eyes of your employer, you will do it to get ahead. That negative comment or idea could be motivated based on gender, age, race, religion or manipulation like seeking sexual favors in exchange for career advancement. We need a sea change to course correct our current direction. The status quo just doesn’t work anymore; although it may work for employment attorneys like myself as we are very busy policing this garbage. If you see something, say something. Have the courage to speak out, you will be protected.
Finally, here is my shout out to older employees. If you are an older employee “we honor your wisdom and experience, you are worth every penny we pay you”. Employees who are in their fifties and even sixties are well paid because they have many years of experience to offer, more than someone twenty years their younger. I say we should keep them on board and ignore the bottom-line cost issues and focus on their economic impact these older wiser employees can create for the company. Management must stop terminating the baby boomers because the economic argument that fosters this decision making is not financially sound and never was to begin with. It’s like a bad drug addiction. Remember, wisdom still is a virtue for a reason.
When will this change occur? When management realizes they can make greater revenue multiples by providing better job security. They will have to stop listening to management side defense employment counsel who banter incessantly to maintain the employment at-will rule for every client. The world isn’t flat, or at least until someone very smart said it wasn’t. Same goes here, management should adopt this new rule and maybe just maybe they will convince themselves that #employees matter.
If you want more information about employment law issues, please feel free to contact Mark Carey, Carey & Associates, P.C., at firstname.lastname@example.org or call the office at 203-984-5536.
The next recession is now here, depending on the of source of information or this source. The Federal Reserve is reversing interest rate hikes to soften the economic expansion and the unemployment rate is at a 50 year low. We are well past the cyclical ten year timeframe as recessions go. What is your strategy to preserve your job in the face of this new recession? What is your strategy if and when you are laid off?
You are probably thinking, “what strategy?” You get up, go to work and hope you can continue to remain an at-will employees until the end of the new pay period, under the presumption you have no control over your job. Better yet, you planned on retiring from your company in the distant future. On the other end of the spectrum, there are employees who think their longevity with their employers will insulate them from any headcount reductions during recessions. Both viewpoints are wrong and employees can control their employment outcomes during a recession.
5 Strategies To Save Your Job During a Recession
The following strategies are followed by our clients when they see the “writing on the wall” by their managers. Although some clients never see the messaging from their employer, we do. Depending on how soon you pick up all the clues determines which strategy to pursue. Hint, the sooner you speak with an employment attorney the better. If we are engaged earlier in the process, we can evaluate and develop an aggressive strategy that will force the employer to maintain your employment and/or pay a larger severance package with more favorable terms.
Plan Ahead and Gather Intelligence From Managers and Coworkers
Are you proactive about your employment or do you follow the wait and see approach? Becoming proactive with your employer means obtaining objective feedback from your managers and coworkers. No, I am not referring to the annual performance review or 360 reviews. A proactive employee will develop an initial assessment of his or her own performance by quietly engaging in one on one discussions with managers and coworkers about their working relationship and performance. You will need to keep detailed notes of these conversations in order to track the information over time and over various contexts. Forget about the formalities of the annual review or the vague performance metrics employers follows. I am talking about all the intel you can gather by having a straight up ever day conversation with your manager and coworkers. Examine the body cues such as facial expressions, tone of voice and the context of conversations in relation to those cues. Observe more instead of being reactionary or defensive. The better you are at this task, the more intelligence you will pick up, as your manager or coworker will not know you are gathering information. Once you collected this information, you will need to strategize how to position yourself as a thought leader, influencer, leader and over-all get the job done kind of employee. Lead by example and always remain the consummate professional during all interactions with your employer and coworkers.
Ironically, your employer is collecting similar information about you and your coworkers. In a recent article from SHRM, “A good way to begin is by collecting information about the organization’s workforce that can be used for long-range planning. ‘[HR] should be looking at the data, knowing who is where in their careers, who is where in their teams’… ‘Are people ready to move into the next position? Are they happy where they are?’ Review job descriptions and tasks and determine whether responsibility for those tasks can be more evenly distributed throughout the team. By understanding the big picture, HR leaders can advise business leaders on how to ready the workforce for future changes without resorting to morale-damaging layoffs.”
File Internal Complaints of Discrimination to Maintain Your Job
Once we determine you are may be the victim of employment discrimination or have other employment claims, we will advise you about bringing these claims to your employers attention without escalating to an external governmental agency. The main idea here is to engage in a protective activity to force your employer to “back the heck off” and cause them to reevaluate your potential termination. Our longest standing record to keep an employee employed using this method is two years (my opposing counsel in that case was not happy, but I was not there to please him).
If necessary, you may need to file your discrimination claims with governmental agencies in order to preserve your legal rights. The same antiretaliation laws apply and employers will back off for a limited period of time in order to avoid you asserting an easy to prove retaliation claim.
Dealing With Performance Improvement Plans (PIPS)
Combatting those inaccurate, one-sided and self-serving performance improvement plans. We wrote about this issue in Are Performance Improvement Plans (PIPS) Illegal? A PIP is a clear indicator you will be terminated and you will need to engage an employment attorney ASAP!
Severance Negotiation Based Years of Service
This strategy is relatively straight forward. If you are slated for termination in a layoff, your employer may have a severance plan governed by ERISA, a federal statute that governs these plans. Essentially, an ERISA severance plan spells out the amount you will be paid a salary continuation based on the number of years you worked for the company. There is one catch, you will need to sign a waiver and release of all your legal claims against the employer in order to receive the payout. You will also need an employment attorney to review the settlement agreement to insert favorable terms or get rid of unfriendly terms like noncompetition agreements. Make sure when speaking with an employment attorney that he or she is an ERISA attorney, as there is a difference. Our ERISA attorneys know how the statute works and will even point out in certain cases that you can create an ERISA plan based on one employee, “you”, even though the employer never created an ERISA plan. Engage us to learn more.
Getting Rid of That Noncompete Agreement on the Way Out
Great, you will be getting terminated but your employer stuck you with a noncompete, either at the start of your job or as part of the severance agreement. What do you do? The noncompete does not benefit you at all, only your employer. Now you have to navigate away from jobs you would normally apply for given your years in the same industry. Is this fair? No. Someone has to pay the utilities, mortgage and household expenses, but do not count on your employer to do you a favor. I have long taken a stand against these selfish one sided agreements and forced employers to rescind them or obtain an order from the court to void them. We can help you remove your noncompete agreement with your employer and make you a free agent in the job market. We will challenge the validity of the agreement with the employer directly and if the employer does not back down, we will take them to court through what is called a declaratory judgment action. Essentially, we ask courts to void the agreement due to lack of intention by the employee to enter into the agreement, aka a lack of consideration.
If you need more help planning for your future employment issues, please contact an employment attorney in our office. Employment law is all we do.
We all have made decisions we regret later on at some point in our lives, especially related to our work. Here are three very good reasons why accepting a severance pay may not be in your best interest.
Reason 1: Confidentiality Clauses and Clawbacks
You were just presented with a severance package but you hold the brass ring of all time employment war stories there is. You plan on exposing your employer and you are extremely agitated. Without a doubt, you think you have the greatest case in the world. Then you discover the severance agreement contains an iron-clad confidentiality clause that will prohibit you, your wife, your children and your parents, from ever telling your big story about a colossal corporate wrongdoing. If you accept the confidentiality clause and later breach the provision through disclosure, you risk the company taking back all of the severance pay and getting sued by the company. At this point, the severance pay must outweigh the potential monetary value of public exposure and your credibility as a new whistleblower. But your career may take a dive. This is the classic catch-22 I see all too often. You may not want to accept the severance agreement if the future monetary reward is great.
Reason 2: Non-competition and Non-solicitation Clauses
Remember that document you signed when you were on-boarded and were not really sure why you were checking the electronic box? Yes, that one. The non-competition and non-solicitation agreement you never intended to enter into. Now, upon separation, your employer hands you the severance agreement and you see an acknowledgment provision relating to the old non-competition and non-solicitation agreement. In the alternative, the non-competition and non-solicitation agreement is presented in the severance agreement and you never had one while working for the company. It gets worse, you were just offered a higher paying position with a competitive company which also does business with the employer (yes this does happen) or the new employer is both the competitor and the former customer/vendor). In either example, you want to accept the severance pay because it is modestly reasonable, let’s say $75,000-$100,000. But your new offer pays a salary of three times the severance amount and several years of employment. Obviously, you may want to decline the severance if this the first time you have been presented with a non-compete and non-solicitation provision, as the future salary far outweighs the severance being offered. You may want to ask the new employer to offer a sign-on bonus in exchange for the leave behind pay (severance and bonus). But what do you do if the non-competition and non-solicitation agreement was signed back on your first day of work? In this case, signing a severance agreement acknowledging the original non-compete only makes matters worse. You are stuck with the restrictive covenants. You may need to challenge the enforceability of the original agreement by declaring it void for lack of consideration (you did not intend to enter into it). We do this all the time but there are risks associated with moving forward with employer number two, mainly having an injunction filed against you. Again, the future salary will dictate your choice here and hopefully, your new employer will financially support your choice to compete.
Reason 3: Severance Amount Is Too Low
Let’s assume you have worked for the employer for ten years before being offered a severance package. When you open the agreement, the severance amount is small. You discover the confidentiality clause and the restrictive covenant provisions mentioned above. You conclude the severance is just too small in comparison to the loss of future economic value of not working in your industry. You can decline the severance and sleep well at night knowing you can remain in your chosen field of work. In the alternative, you can hire an employment attorney to scope out any and all possible legal claims to leverage on your employer to get a higher severance amount. This is what we do every day. If you’ve been terminated by your employer and offered a severance agreement, let the employment lawyers at Carey & Associates, P.C. help you evaluate the pros and cons of signing the agreement.