Have you ever found yourself facing the daunting task of negotiating a severance agreement after losing your job? You’re not alone, and understanding the intricacies of this process could be the key to securing the compensation or severance pay you deserve. In this enlightening episode of the Employee Survival Guide®, Mark Carey dives deep into the world of severance negotiations, shedding light on critical aspects that every employee should know. Severance pay is not just a financial cushion; it’s a lifeline that can empower you during a challenging transition in your career.
Mark emphasizes the vital role of having an experienced employment attorney by your side, as they can help create leverage during negotiations against employers who often seek to minimize severance pay offers. The importance of preparation is paramount, and he encourages listeners to craft a detailed narrative of their employment situation. This narrative can significantly influence the severance pay amount you receive, particularly in cases involving discrimination, breach of contract, or a hostile work environment.
Throughout this episode, you’ll learn about the various factors to consider when negotiating your severance pay, including the implications of signing agreements that may contain confidentiality clauses or time limits for revocation. Mark’s insights into the legal language involved in these negotiations will empower you to approach the process with confidence and clarity. He advocates for viewing the hiring of a lawyer as an investment in your future rather than just another expense, highlighting the potential long-term benefits of securing your employee rights.
Whether you’re navigating employment law issues or dealing with workplace challenges such as discrimination, retaliation, or harassment, this episode provides insider tips that can make a difference in your severance pay negotiation journey. Mark concludes by stressing the necessity of thorough preparation and a solid understanding of your rights and options. Don’t let your severance negotiation be an afterthought; equip yourself with the knowledge and tools you need to advocate for yourself effectively.
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For more information, please contact
If you enjoyed this episode of the Employee Survival Guide please like us on Facebook, Twitter and LinkedIn. We would really appreciate if you could leave a review of this podcast on your favorite podcast player such as Apple Podcasts and Spotify. Leaving a review will inform other listeners you found the content on this podcast is important in the area of employment law in the United States.
For more information, please contact our employment attorneys at Carey & Associates, P.C. at 203-255-4150, www.capclaw.com.
Disclaimer: For educational use only, not intended to be legal advice.
5 Essential Things To Know About Severance Agreements
Transcript:
Hello again, it’s Mark Carey, and welcome to the Employee Survival Guide. In this edition, we will talk about how to negotiate severance agreements. Severance agreements are the primary way clients come to our office and we evaluate them on a daily basis, we’ll have anywhere from, well 10 or more 20 of these cases at a given time. And out of severance agreements, or the review of severance agreements for clients, we develop client cases. And I’ll get into the more specifics of this later in the episode. But the we really our entrance into the client cases through the severance agreement, and I wanted to walk you through the basics of what we do. So you know what to do when your situation arises. Unfortunately, that may be that you have a severance being offered to you and you’ve lost your job. The the role of severance agreement, negotiation is probably the most prominent thing that we do in our office, besides litigation, is something we encourage because obviously, it’s creating settlements between parties. We like that we don’t want clients paying legal fees for long duration. No one does. And so getting to the heart of the issues for severance negotiation, it’s all about what your leverage is. And first leverage is you need to have an attorney, an employment attorney specifically, but without the attorney, the employer is going to size down your severance offer to essentially said, they’ll just have to take what they offer you and you don’t have the leverage to increase the offer. And what the Employment Lawyers do is create the leverage for you. Now, you’re going to have to spend money, unfortunately, to hire experienced employment counsel, to develop a case evaluate whether you can assert claims and create more leverage and in the end, get more money out of the employer. We as a firm do not participate in the outcome of client cases in terms of their severance, we believe or I believe, as the founder of the firm, that we want the money to go back to you to pay for the financial needs you have, we do our job, and we do it well, and we move on to the next client. So it’s very important to look at the severance negotiation in a way that, that we look at it, and try to look at it objectively from your end. And I’ll get into that in the specific issues in a second. But first and foremost, we need you to explain what happened of the facts leading up to the termination. And by that I mean, we need a written narrative. If you’re not creating a narrative about your case, and you expect the lawyer just to read your mind, forget about it. And the employer is not going to do that. So we as a practice have, we require clients to create a detailed chronological narrative, the longer the better. Oftentimes, you get quotes from perspective or the opposing counsel that the client had recorded conversations. In fact, often clients have great memories and are able to pull together all the information, the narrative and one source. For example, you can use Slack, text, message, email, anything your memory, most important, I can’t underestimate the value of your memory to contribute to the narrative. And you’re going to dump everything you can into that narrative. And why go through all that effort. Because the the power of the narrative has a direct correlation to the amount of money you’re going to receive in severance. And this is something I can’t understate to you. So get your narrative together. But before you get your narrative together, call us. And we’ll have a conversation. It’s free of charge, of course, which you’re trying to understand if there’s anything we can do. But we’re going to try to explain to you in that conversation. I’ll try to do my best right now on the this edition of the podcast to tell you that you’re when you look at your fact pattern, and you create your narrative. You’re You’re basically using one language, and we’re using another language what the law requires. So you need to do some learning about and we provide this detailed background learning for you to understand. In our website, if you just spent a time and read the articles and the different practice areas depending upon your claim, you’ll be able to issue spot or fact spot the things you need to create the claims. For example, if you have a sexual harassment claim, you’re going to want to identify all the specific examples of how you’re treated differently because of being female or male or transgender or sexual orientation, and how other people are treated differently than you more favorably typically. And so the details of the narrative will get into this kind of compared to our type of treatment of you versus everybody else. And for help the lawyer figure out whether you have a claim or not to essentially ask for more money. So read articles, educate yourself about what the lawyers need, and hire an employment lawyer. You can’t underestimate that issue. Hire me Anyone, you can hire our office where just hire an employment lawyer. And you’ll understand why at the end of the transaction, because the lawyer will guide you through things you didn’t even know it’s worth the money. Again, it’s, I can’t underestimate that value of hiring the lawyer. It’s not a sales pitch to hire lawyers, it’s simply, you need to know what the lawyers are dealing with, and what the corporation’s dealing with by the rules, instead of in your own mind what you presumed to be, because oftentimes, that’s incorrect. So, down to the basics, the written narrative helps us understand if there are claims, we will then advise you about the different claims you have and how to go about it. And I can just go through the basics for you so that you are up to speed on what those basics are. And I apologize, the cursor can’t move fast enough my eyes, we can segue, we can edit that part out the so the first basis are you need to get an agreement from your employer. The the severance agreement is the method to which you’re going to exit your employment, it’s something that typically they’re going to hand you you’re in shock to get it, you’re in disbelief. You can’t imagine your career, your identity, everything’s gone in a heartbeat didn’t even see it coming. You need to actually throw all those pieces of emotion out of the transaction, and identify the facts that led to what happened to you, again, the narrative. So the lawyer is when I approach these transactions on objective Lee looking at what’s happening, I can be empathetic to what you’re going through. But I know to pierce through that and look and challenge the client to get all the facts that I need to demonstrate what I’m trying to prove to this side. So emotions out, we’ll deal with on the sideline. You know, I’ve got my years of experience providing mental counseling to people, although not a therapist, but I do my best. And if you put the time and energy into the case, to evaluate your case, with an employment lawyer, you’ll reap rewards of that investment after you’re done. Again, severance negotiation is a transaction you’re investing into it. Don’t believe anything else. If you’re looking for justice, and all those other kind of principle ideas, you better have your finances in order in order to obtain that, in this legal economy, the the issue of justice is very highly priced. And it’s not for everybody to go fight the full front litigation and challenge the employer course the employer has more money than you do. So the next thing is how much to ask for. So in terms of severance, there are no rules to what to ask for. And you can find yourself, get asking for maybe one two x of your salary, sometimes three, for a higher price executives or executives with compensation, executive compensation issues or incentive compensation. We’re looking at other forms of agreements, they enter into that enhance the severance being offered. And that’s for another podcast to talk about those types of equity agreements and how they can potentially you know, the method of termination determines what you get at the end of your either to get an acceleration of your vesting or not. But how much is too much is really the issue there for the for the for you to just figure out and then implement Later, we’ll help you do that. And that is really, kind of a unspoken rule that I can only offer is, if you ask for too much, let’s say three times the amount of your salary, we asked for a million dollars for it to make it easy. You’re gonna find yourself in litigation with your employer. It’s not something to be taken lightly. And you need to really consider what you’re being you’re asking for. So that when you’re asked is reasonable to the other side, and they say okay, you’re not being ridiculous in terms of your amount. Again, each case is factually different. Again, no rules to this issue. There are no laws saying what amount of severance you should be paid. I people come at me all the time with the you know, two weeks every year service and I’ll say show me where that is. And I’ll get into the more specifics about planned benefits in a second. The third issue about basic issue about severance is, you know, you’re getting divorced from your employer, it means you’re gonna basically release your claims against the employer, and they’re buying your confidentiality, meaning your silence, so be prepared to shut up. You can’t write a book, you can’t talk about the issues. There are some caveats and how they craft agreements. Sometimes the confidentiality is dealing with the agreement only in terms of conditions of the agreement, but not the underlying claims. That’s actually preferable. But nonetheless, you can’t, you know, discuss the agreement after you sign it if you want the money. If you do, take the money, you gotta basically agree to say no comment when somebody asks you about it. The next one is number four. The most important part of this goes back to the factual narrative is how to leverage up, you need to find some type of claim to hook on to ask for more money, for example, a breach of contract or age discrimination case or a wage violation. And you if you don’t have them, those types of claims or any claims, the employment lawyer is going to deal with more of a kind of a goodwill at will, you know, give me some more money, because he’s a nice guy approach. But nine times out of 10, that does not really work. A lot of clients seem to want to surpass or bypass our processes and do that they’re not successful, they turn around, they say, Okay, I didn’t that process didn’t work for me. So what do you suggest? So, you follow a process, we have one, it works, essentially, it says, basically, give me the narration of the claims, we turn it into an affidavit, we send the employer a notice a claims letter, it’s looks pretty formal, because it is on letterhead, and it directly confronts the employer. And it spells out a narrative, you know, that narrative, you’re so listening, you’re listening to so often now in the political season, or, you know, any narratives are out there. They’re being curated. And that narrative is, if your case is the same thing we need to find, what is that story that’s going to just just infuriate the employer, and it has to be factually based. Oftentimes, we uncover these scandalous behavior by employers, and they’re just ashamed that that has happened. And it happens to public companies that happens to companies, nonprofits, even, it’s, you just have to dig deep into the fact pattern and find out what’s there because there’s always a skeleton in every employer’s closet. And so with the narrative affidavit and the nosa claims, and a third document we use called an I’m sorry, a demand, which is identical to the to the notice of claims, but it puts forth a demand. The notice of claims and the demand letter are two separate types of documents. One’s an evidentiary document, notice claims that tells the insurance company that we have a problem, the employer will tell the insurance company that to put a claim in and then second, the notice of claim, I’m sorry, the demand letter is a non binding, non evidentiary document that’s used, and it can’t be introduced in a court of law, because it’s not a piece of evidence. But those three documents will get the conversation started with your employer. And I can’t emphasize that enough. And you have to proceed along that that route, because you’re essentially telling the employer under oath that these facts happen, you screwed me over, and you’re going to pay for or we’re going to sue you. And most employers these days and 2022 want to avoid litigation. They want to avoid the use of outside counsel, they want to avoid running up the costs. And I wrote about in an article years ago that employers are more addicted to the severance agreement and getting it from you than you are a fear of losing it, or having been taken off the table, which I am asked all the time, the agreements never taken off the table. Employers always want to negotiate it, because it’s in their best interest. The next item I’m gonna talk about is the non competition and non solicitation provisions that either in their agreement, the settlement agreement, or they’re in previous agreements that you want to get rid of, because they are restricting your ability to work. And the Why do you want to do that? Well, we want you as the employee to become a free agent after you leave. Let’s say you were fired for discriminatory basis, do you think it’s fair for the employer to hold you to a non compete after the fact when they screwed you over to fire you because of age? No, it’s not fair. And these days, especially during a pandemic, we want people to be working because as we know, 40 million people got laid off. So getting an attacking the non competition, we do that during the service negotiation, the form of what we say a declaratory judgment type of claim, where we attack the underlying what’s called consideration for the agreement, meaning that did you intend to have an occupation? Well, no one wants a non compete, I mean, it’s only favoring the employer. So we always attack that issue, as we want you to be a free agent to go work because you know, what, if you’re 56 or 65 years old, you’re just being fired up for 33 years, you’re gonna have a hard time finding a job, because there is age bias out there. And it’s a lot easier to find a job if you don’t have a non compete. That makes sense, right? Yes, of course. So getting rid of the non compete is something we do during the service negotiations and highly encourage you to think about that. Next item on the list is the time limits for signing the agreement or to revoke it. There are no rules on signing severance agreements, you’ll see this 21 day rule or this 45 day rule. That’s about giving you notice, oftentimes, the severance agreement is linked to some form of severance plan by the company and they’ll have to follow rules there. But those those rules those timelines, Aren’t negotiable, we usually ask for more time to negotiate an employer usually gives it once you sign the agreement you have, and you’re over the age of 40, you have seven days to revoke that agreement after you sign it. It’s just it’s federal law. It’s designed to have a second look at it, you might feel, you know, misgivings after signing the darn thing and you want to do something, and it permits you to do that. So no rules other than the seven day rule of verification rule, which is driven by statute, but no rules in terms of how long you have to sign it for. Even though these agreements, say 21 days, etc, to sign them. The next item is no right to reemployment. This means that when you sign the release, the employer doesn’t want you back makes sense, because you probably create a stink in your way out because you create a narrative with notice of claims and a lot of anxiety from the employer, they don’t want you back. So if you go that route, don’t expect the employer to you know, feel the love for you after the fact because there’s not gonna be there. The final issue or the eighth issue here is severance plans and ERISA. Again, people often say that they have heard about other people getting fired and got severance, and two weeks per year service, whatever. It’s really two issues. Either the company has some type of policy, not a plan, but a policy that what they do, and they just treat everybody, whatever they want to. And the other version is having actual severance plan of plan that they file with the United States Department of Labor, Washington, that’s called an ERISA severance plan. And that has rules to it, namely, your years of service equates to the amount you’re gonna get for severance benefits, probably, you know, anywhere from 26 weeks and below, and usually a cap. But when you’re dealing with claims of let’s say, age discrimination on top of severance, or severance plan benefit, the age discrimination, claim itself will be an additional financial factor put into the severance arrangement and negotiation to enhance what you’re let’s say you’re offered 26 weeks into the plan, you got to sign a release to get it. But then you have this discrimination claim, you’re going to use the claim to put more money on the table. employer doesn’t like it, but they have to do it if they want to avoid litigation. So as interested attorney myself, the aspects of ERISA are straightforward for me to explain to the client, essentially, we’re going to identify whether the severance being offered is part of a severance plan or not, or just policy until a client that and negotiate accordingly. The ninth item on the list that I’m working on is mutual release of claims. And when you get divorced, you want to do it completely. And you want to do by both sides, the employer fires you, you fire them, you release them, they release you. And the it’s really important not to have any hangover effect whereby the employer can come back after you after the fact. Some employers a minute share them will attempt to, you know, put in language in the agreement to stop or to prevent or protect the right for the employer to, you know, to sue you after the fact for claims, let’s say criminality or embezzlement, things they just couldn’t uncover. Because you’re so good at your job, you covered it up and they couldn’t see it. I’m just kidding. Normally, you shouldn’t be doing embezzlement and stuff like that. But that’s what they fear. And it’s oftentimes I’ll ask the question of the client, you know, is anything that’s keeping you awake at night that you really, really concerned about that was that you did it your job, and clients do come clean. And typically, they say, there’s nothing I really be concerned about being sued. There are those notable cases in my memory bank of 1000s of cases, I’ve dealt with that, where I did have that issue, come up with an embezzlement or something or fraud, and so mutualists of clients, both parties, clean break, everybody wants that. And typically, it’s pretty easy to accomplish. And then the last item is the issue of, you know, if you don’t get a settlement, you have litigation. And it’s really the cornerstone of what we do in our office is to promote settlements for both parties, kind of an objective neutral way, even though we’re the advocate, even though we’re creating this powerful narrative on the employer, we do want the employer and the employee to resolve because the alternative is costly. It’s it’s more difficult down the road to begin to negotiate settlement because people get hunkered down in the positions. And it takes a usually a court involved mediation session to help the parties out of it. roughly about 80% of time the cases were resolving without litigation, which is great. helps everybody concern employers and employees. And about 20% of the time you have employers who have maybe counterclaims or they have negotiation policy to bleed you out. To You know, spend your money on legal fees to the point where you just cry uncle and give up. That’s kind of an older school type of approach still does happen. But we know when we see it It’s early on, because our process, you know, usually draws that out. So, in summary, you know, you want to take severance negotiations very seriously. And also objectively speaking, it, I came to this conclusion the other day that, you know, severance negotiation is a luxury. And if you had the financial means to afford it, it can have huge payoffs. Now you got to have claims to do so to support those higher amounts and severance, but it is a luxury, please, eyes wide open before you do this and hire some attorney, don’t hire the attorney and think that they’re just going to magically wave a wand and severance shows up, you got to work with us to develop it. But you also have to put the money up to deal with it. And we don’t give estimates on our retainer agreements, because we can’t predict the future. But walk in knowing that if you’re asking for two x a year salary, and it’s a quarter million dollars, you got to be reasonable with yourself to say that you’re going to experience some, you know, legal fees for the attorneys to investigate, open up your fact pattern, look at what the what’s there and advise you. So let’s just be reasonable about that. Okay. So when you hire the attorney, it’s an investment, it’s a luxury, you don’t have to do it, you can take what they want, or the employers offering and be done with it. So just do your study before you start, this process is all going to happen like a train wreck all at one time, you’re gonna be in a lot of stress, but just ground yourself. read an article, like on a website. In this case, I’m reading from an article how to negotiate severance agreements, blog that was done many years ago, but still holds true today, but read up. Other than that, thank you for listening to the podcast today and if you have ny questions, give us a call t Carey & Associates PC. We’re n the web www.capclaw.com and ou can find us we’ll talk to ou right a