Considerations for a Severance Agreement
Severance agreements may be drafted by your employer to protect their company. You may request one to protect your interests. Either way, you need an attorney who is knowledgeable in severance agreements to help you negotiate for fair terms.
Some of the issues you should consider for a severance offer are your pension. You need to find out if the pension you’ve worked hard to receive is still going to be given to you when you’re of retirement age. You do not want to give up your rights to that pension.
Was your 401 (k) subject to an employer match? If you were not with the company long enough to be vested, you could lose the employer match. You get the 401 (k) funds that you invested, but you could lose a lot of money if your company did not provide immediate vesting.
Is there a confidentiality agreement in the severance agreement? The company may not want you saying anything, but do you know what they can say about you? You need to find out what this confidentiality agreement covers.
What about a release from claims? That’s a standard addition to a severance agreement. The company wants to you release them from future lawsuits. Does it also say that they release you? If you have to agree to not hold them liable, you need the same agreement.
One more addition to a severance agreement that needs careful attention is a non-compete clause. If you’re terminated for any reason, a non-compete clause would forbid you from taking a position with a competitor for a specific period of time. Unless you’re ready to dive into a completely different line of work, a non-compete agreement could keep you from finding a new job.
Severance Pay Laws
The United States Department of Labor does not have laws covering employees who have been terminated from their jobs. The company is required to pay for hours worked prior to termination. They must also pay you for your unused vacation. Beyond that, severance pay is up to the company.
