Last Updated: June 2025
The real reason companies pay severance compensation is because they fear being sued by folks like myself. Employers are super paranoid over employment lawsuits, and the severance amounts I have received prove it. I have participated in hundreds of severance cases over my lengthy career, with over a decade of legal experience handling employment law cases for a wide range of clients. At my law office, our dedicated team provides comprehensive services to clients, ensuring they receive the support and legal guidance they need in employment law matters.
Employers maintain a constant fear of litigation because they know they are breaking the law regarding their treatment of employees. This is the only reason why I have been so darn busy over the past two decades fighting employers. I refuse to give employers the benefit of the doubt due to mistakes or ineptness, as that viewpoint is foolish and naive. Big businesses and small businesses, as well as business owners, save a heck of a lot of money when they unlawfully terminate employees, fail to pay wages, and fail to pay employee benefits.
As a law office, we represent employers and employees—including business owners and small businesses—in employment law cases, providing tailored legal service and support. A relative with a business degree once remarked that companies are in the business of assessing and taking risks. That is exactly the behavior I have been watching my entire career. Employers know their actions are illegal, but take the risk nonetheless. They do it because the financial motivation is enormous. They know the variables of the transaction and manipulate them to their favor. Finally, employers see employees as powerless to do anything about it, which in my opinion is poor business judgment. The more often employees confront guilty employers, the less likely employers will continue to abuse employees. Legal considerations are critical in these situations, and employment lawyers offer cost effective solutions to legal issues and other legal issues that arise from termination and severance negotiations.
My observation is simple. The more dollars employers offer during the severance negotiation, the more likely the unlawful activity occurred. On average, I have seen final severance amounts in the range of $150,000, $300,000, $550,000, and even $750,000. Of course, I cannot disclose actual case amounts to due confidentiality, but I wanted to give you a feel for the amounts employers have been paying to cover up their unlawful behavior. Severance negotiations often involve complex settlement negotiations, where the employee’s representative plays a key role in achieving favorable outcomes for clients.
The aforementioned amounts are not the result of ERISA severance plans or pre-negotiated executive severance agreements but reflect cases where I have demonstrated employer liability across a spectrum of claims without the use of litigation. Specifically, and it is no secret, you have to have a valid legal claim(s), supported by lengthy detailed facts, to convince the employer of their misdeeds and get them to pay severance. I have a rule of thumb, roughly 80% of the time the employer would rather negotiate a pre-lawsuit settlement than risk public disclosure and extreme litigation costs. Employers also know that once other employees learn of the disastrous liability, others will follow, so they quickly put a lid on the deal with a severance agreement containing a strict confidentiality clause. However, I routinely receive calls from multiple employees from the same company, including people previously named in prior cases. Fortunately, news does travel fast amongst employees before employers can lock down the confidentiality provision in the severance agreement.
Employees faced with a severance offer should dumpster dive into the facts and consult an employment attorney. Severance compensation could result in limited financial investment into legal fees. Employees are encouraged to consult a CT employment lawyer, CT employment attorney, or employment lawyer to fully understand their rights and options regarding severance packages and termination.
If you would like more information, contact our employment attorneys in Connecticut and New York, Carey & Associates PC at 203-255-4150.
Three Reasons Why You Should Not Accept Severance Pay
The Real Reason Behind Severance Payments
Severance payments have become a standard practice in the world of employment law, often viewed as a financial bridge for departing employees as they transition to a new job or career. While these payments can certainly provide much-needed support, the reality is that severance payments are just as much about protecting employers as they are about helping employees. In today’s complex labor landscape, employers are acutely aware of the risks associated with employment disputes and potential lawsuits. By offering severance payments, employers aim to minimize their exposure to legal claims, maintain compliance with labor laws, and safeguard their reputation in the marketplace. This practice is not just about goodwill—it’s a calculated move within the broader context of employment law and labor regulations, designed to manage risk and maintain control over the employment relationship. Understanding the real motivations behind severance payments is essential for both employees and employers navigating the ever-evolving world of employment.
Understanding Employment and Severance
Employment law and labor laws serve as the foundation for the relationship between employers and employees, setting clear guidelines for rights, responsibilities, and benefits. Severance agreements and severance benefits are critical tools within this legal framework, providing a structured way for employers to offer financial support to departing employees. These agreements are not just about compensation—they often include terms that protect both parties, such as confidentiality clauses and noncompete provisions. Employment lawyers and law firms, especially those with extensive experience in Connecticut, play a vital role in drafting, reviewing, and negotiating severance packages to ensure compliance with all relevant laws. By leveraging the expertise of a ct employment law firm, employers can create severance packages that are both legally sound and tailored to the needs of their business, while employees can ensure their rights are protected and that they receive the benefits they deserve. Understanding the nuances of employment law and severance agreements is crucial for anyone involved in employment transitions.
Employer Obligations and Legal Risks
When it comes to severance payments, employers must navigate a complex web of federal and state regulations, including the Fair Labor Standards Act (FLSA) and the Worker Adjustment and Retraining Notification (WARN) Act. These laws set minimum standards for employee treatment and require employers to provide certain benefits or notifications in cases of mass layoffs or terminations. Failing to comply with these legal obligations can expose employers to significant risks, including costly lawsuits, government fines, and damage to their reputation among current and future employees. Severance packages, when properly structured, can help employers fulfill their legal duties while also providing a measure of protection against potential claims. Connecticut employment attorneys are invaluable in this process, helping employers understand their obligations, avoid common pitfalls, and develop severance packages that minimize legal exposure while supporting departing employees. In today’s litigious environment, proactive legal counsel is not just a luxury—it’s a necessity for any employer seeking to manage employment law matters effectively.
Hostile Work Environment: A Hidden Driver of Severance
A hostile work environment is often a hidden catalyst behind many severance payments. When employees experience harassment, discrimination, or other forms of workplace mistreatment, employers may offer severance packages as a way to resolve the situation quietly and avoid the risk of litigation. Employment lawyers who specialize in hostile work environment cases understand the complexities of employment law and can help employees assess whether a severance offer truly compensates for the harm suffered. Frequently, these severance packages come with strings attached—such as waivers of legal rights or agreements not to pursue further claims. While these provisions can offer closure, employees should be cautious and seek legal counsel before signing away their rights. Employers, on the other hand, use these agreements to limit their liability and prevent negative publicity. Understanding the role of severance payments in addressing hostile work environments is essential for both employees and employers seeking fair and lawful resolutions to workplace disputes.
Discrimination and Severance: Protecting Against Claims
Employment discrimination remains a significant concern in workplaces across the country, and severance packages are often used as a tool to protect employers from potential claims. Under employment law, employers must ensure that their severance agreements are applied fairly and do not discriminate based on race, gender, age, disability, or other protected characteristics. Connecticut employment lawyers are instrumental in helping employers design severance packages that comply with civil rights laws, such as Title VII of the Civil Rights Act, and avoid practices that could lead to discrimination claims. For employees who believe they have been wrongfully terminated or subjected to discrimination, seeking legal counsel is critical to understanding their rights and options for recourse. By addressing discrimination proactively through fair severance practices and legal guidance, employers can reduce the risk of costly litigation and maintain a positive workplace culture, while employees can ensure their legal rights are fully protected.
Get Help From Employment Law Attorneys
At Carey & Associates, P.C., we help employees understand their rights when it comes to severance agreements and legal claims. If you believe your employer is offering severance to avoid a lawsuit or hide wrongful behavior, we can help you review the terms and decide what to do next. Our team has extensive experience holding employers accountable and protecting employees from unfair treatment. Contact us today for a free consultation and let us guide you through your legal options with clarity and confidence.