The good news – you don’t have a chip implanted in your brain so you can remember being terminated.
The bad news – you don’t have a chip implanted in your brain so you can remember being terminated.
Being fired or terminated or laid off is extremely stressful. It also usually comes with what looks like fairly standard paperwork. Separation or severance – they’re usually the same thing from a legal standpoint. Below are some tips to navigate and negotiate your termination offer.
First, determine if you are being offered severance pursuant to a company severance plan, known as an ERISA plan (Employee Retirement Income Security Act). These plans are publicly available and subject to ERISA laws. In short, your employer is legally obligated to comply with their own ERISA plan, so it’s important to confirm if this is part of your benefits package. If you are unsure whether you have ERISA benefits, the first step is to ask your company HR (or management) for a copy of your complete personnel file. If you want to be certain, this is a good time to seek legal support. Spoiler alert – I know a good lawyer for you.
If you do not have a company ERISA plan, but you are being offered severance, this is typically (but not always) a standalone contract offer. Here’s where I’m going to take you into Law School Contracts Class 101.
Every contract starts as a question of offer and acceptance. You are being offered something – typically the severance pay. And in exchange they are asking things of you – the terms of the severance contract document. Basic offer. Up to you whether you accept.
This is why you always have the option to negotiate. They want something from you – for you to sign their severance contract – and that is why they are offering you money. This gives you leverage. And power.
Without an ERISA plan (or a separate pre-negotiated contract), if you’re an at-will employee (as over 90% of employees in the USA are), the employer is not required to offer you anything when they fire you. The employer can simply terminate you and say goodbye. But the overwhelming majority of employers offer terminated employees’ severance. Why? They do this for a very specific reason – they want you to sign their separation agreement.
Here’s what to look for:
The payment terms, a/k/a “consideration.” Consideration is the legal word for payment. Are they offering lump-sum? Weekly pay? How much? How long for you to get paid? You can negotiate the terms of payment, and you can negotiate how much. Push back if they are offering payment over a “severance period” but it will stop if you get new employment (typically this will be worded as “payment over X months, to be paid per normal payroll practices…until employee secures new employment.” This is a bad offer. Push back. Lump sum is always ideal. You can ask for more money.
Release of claims. Extremely valuable to the employer. This is what they want from you. By signing a release, and accepting their separation payment, you are essentially creating an almost unbreakable contract that you agree not to sue them for anything they did to you. This is most important to the employers. They will negotiate for this because they want this.
Confidentiality. This one is also extremely valuable to the employer. The employer wants the Release of Claims + Confidentiality. These are the provisions that matter most to them. This gives you power to negotiate.
“Non-disparagement.” Most employer separation agreements make this one-sided in their favor. Non-disparagement is stricter than defamation / libel /slander (which you have probably heard of). Non-disparagement means that you cannot say anything remotely negative about the company to anyone (usually ever, unless there is a time restriction). Or you risk penalties in the agreement, which could include claw back of your entire separation pay. What does this actually mean in reality? Whether it’s a job interview or a conversation with a friend, if anyone asks you about how your job went, your answer needs to be “no comment” or something positive. Obviously this is not how most of us speak to our friends and work-friends on a daily basis. We want to complain about work. It’s going to be awkward at times, but don’t risk your severance over it.
We strongly encourage clients to push back and limit the non-disparagement and also make it mutual. Mutual means that the employer can likewise agree that they will also not spread negative comments about you. This is extremely important to many people. After a termination, we want to immediately shut down the gossip network.
Cooperation clause. These are becoming incredibly common. The clause will say something like “you agree to assist as needed…” I think it’s pretty crazy that every employer is including these now. I push back. If they want to demand access to you after they fire you, then I demand that they pay you for your time and your costs. Theoretically, if an employer invokes this clause, they could demand that you get on an airplane to come assist them with some random problem, and you would have to bear your own expense or risk losing your entire severance pay. This would be an insane outcome, but it’s theoretically possible. I always push back on these provisions.
Arbitration. Many separation agreements include arbitration policies. As your attorney, we don’t like arbitration. It sounds easier, but it isn’t. And it’s often actually more expensive than litigation.
Days to consider the agreement. 21 days? That means you were terminated alone. 45 days? That means two or more people were terminated at the same time as you. This can impact potential legal claims that you might have. I only point this out because it’s one of the quickest things I look for.
Bottom line – there’s room to negotiate. Don’t just sign. Push back.
If you would like more information about the topic of severance and severance negotiations, please contact Carey & Associates, P.C. at info@capclaw.com or call (203) 255-4150.
