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If you find yourself facing termination and you’ve been handed a severance agreement, there are a number of things you should consider before signing it. Severance pay can offer some welcome relief while you’re unemployed, but it’s important to fully understand the document before signing and making it legally binding. This article can help provide some of this understanding.
Please note: this article should not be taken as direct legal advice. Every employee’s circumstances are unique. You should seek the counsel of an experienced employment attorney to evaluate your particular situation. One more note: if you’ve already signed a severance agreement and you’re over 40, you might be able to revoke it. More on that in a bit.
Are Companies Required to Pay Severance?
If you lost your job due to the COVID-19 pandemic, you’re not alone. Almost 17 million Americans filed unemployment claims in the last 3 weeks, and experts predict that number will continue to rise dramatically. Generally, there is no legal requirement for employers to pay any of these people severance. There are exceptions, such as an ERISA plan that contains a severance program. But for the most part any “at-will” state, and Texas is one of them, can fire you at will with no severance. So why would your company be motivated to pay you money?
Severance agreements typically contain clauses that release employers and related entities from any claims you may have against the company. This protects employers from potentially having to spend valuable time and money on defense, and they’re willing to pay some severance to motivate you to sign over this assurance.
Should You Sign a Severance Agreement?
On the surface, your severance agreement may look fair or even generous. And perhaps it is. On the other hand, you may have a valid legal claim without realizing it, and signing the agreement could release your right to that claim. A strong claim represents value – it could be the leverage you need to negotiate additional severance pay. Whether you suspect you may have a claim or not, it’s smart to meet with a severance agreement lawyer before signing.
Another good reason to get legal counsel is that employers sometimes use severance agreements to insert sections that have nothing to do with severance, such as a non-compete provision or other promises that may restrict your future job search.
It’s important to remember that every word in the agreement means something. Before signing, you should have an employment specialist review every detail and suggest revisions to remove anything that could hinder or hurt you.
Can You Change Your Mind After Signing?
After you sign a contract, it becomes binding. Texas law deems that your signature is an assumption that you understood the terms and the consequences.
There is one exception, known as the Older Workers Benefit Protection Act. If you are over 40, this federal law allows you to revoke a contract within seven days after signing it. On day eight, the contract becomes irrevocable.
A Little Help Goes a Long Way
No matter the circumstances, it’s in your best interest to have your severance agreement reviewed by a specialist in employment law. This lawyer should go through the entire document in detail and explain the meaning and legal ramifications of every provision. Ask a lot of questions. Don’t hold back. This has great bearing on your future, and you want to uncover anything in the agreement that may be detrimental to you.
Seek a lawyer who understands the specific language used in severance agreements and has a strong track record in dealing with them. A good employment attorney can determine if you may have a valid legal claim and how strong it is. Through experience, this lawyer also should know how much severance pay and benefits you should be offered based on your industry, company, position, and the value of any claim you may be agreeing to release.
Some employment attorneys go beyond analyzing the document and are skilled in negotiating severance agreements for better terms. Ultimately, your goal is to be certain that you’re getting all the protection and compensation you’re entitled to before moving on from your company. That should be your lawyer’s goal as well.
Be Sure Before You Sign
Being terminated puts you in a vulnerable position. It’s a very difficult time to be thinking straight when you’re asked to sign an agreement. That’s why it’s so important to remember that this is a binding contract that gives away legal rights. Perhaps the agreement is fair. You just need to be sure of that first, so you don’t make a mistake you later regret. If you’d like to have Gardner Employment Law to review your severance agreement, contact us now.