Employee Severance Agreements – Legal Analysis
In today’s weakened and uncertain economic climate, the sad truth is that many employers are being forced to release members of their work staff, and many employees are facing the loss of their jobs. It is the practice of many employers to present recently dismissed employees with severance packages, conditioning the receipt of any severance benefits on the execution of a severance agreement and release. These agreements require careful legal analysis on both ends – from the perspective of the former employee, and from the perspective of the employer.
If you are an individual that has been given a severance agreement by your employer, it is imperative that you have an attorney review the agreement before you sign. These agreements (whatever they may be called) typically require an individual to waive and release many of his/her rights, including but not limited to the following:
1. The right to file a lawsuit against the employer in the future;
2. The right to seek employment with the employer and its affiliates in the future;
3. The right to seek employment with businesses that are competitive with the employer in the future;
4. The right to ownership of materials and information created by the employee while employed by the employer; and
5. The right to disclose information regarding the employer.
The above-stated list is not exclusive, and severance agreements can vary dramatically from employer to employer. However, these agreements almost always involve the release of very significant rights, which may have major implications on your ability to gain future employment. An attorney can assess your situation and advise you
(1) as to what claims you may have against your employer;
(2) as to whether the severance agreement complies with the law;
(3) as to the rights you will release by signing the agreement (and the implications of such release on your future employment). An experienced law firm can assist you in negotiating a more favorable agreement with your employer. Many employers are sympathetic to their dismissed employees, and are willing to negotiate the terms of these severance agreements.
If you are an employer that would like to present a severance agreement to an employee, it is important that you have an attorney draft or review the agreement to make sure that it is enforceable. In order for restrictive covenants such as non-compete, non-disclosure, and non-solicitation provisions to be enforceable, they have to be carefully tailored in light of the jurisdiction’s applicable law. More importantly, for releases of legal claims to be enforceable, they have to contain certain language required by state and federal law. The failure to carefully draft the provisions of your severance agreement can result in your company having an unenforceable document.
If you are an employee in need of an attorney to review and advise on your severance agreement, or if you are an employer in need of an attorney to draft or review your severance agreement, the attorneys at Gross & Romanick PC are ready to assist you. Our attorneys have extensive experience in employment contract preparation, review, and negotiation. They can carefully explain the implications of the agreement in light of applicable law, and can help you to ensure that the agreement is protective of your interests. Call us today at 703-273-1400 or visit the website at www.gross.com.
© 2009, Gross & Romanick, P.C.