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Should I Sign a Severance Agreement?

Updated: Oct 26, 2022

When you are fired from your job, one of the first things your employer may offer you is a severance agreement. This document lays out the terms of your separation from the company.

It is essential to understand a severance agreement before you sign it, as there may be benefits and drawbacks depending on your situation.

This blog post will discuss what you should look out for in a severance agreement because you could be losing certain rights. Let’s start by reviewing exactly what a separation agreement is, and what it usually entails.

What is a Severance Agreement?

A severance agreement or package is a contract that an employer offers to an employee terminated from the company. It usually includes payment of severance benefits, which may include compensation for unused vacation days and health insurance.

Sometimes, employers try to include provisions that require you to waive your rights (such as your right to sue for discrimination, harassment, or retaliation) or reduce access to benefits such as workers’ compensation. This is why it is crucial to review severance agreements carefully, as they could limit your rights without giving you much in exchange.

What to Look For in a Severance Agreement

There are some additions you should watch out for in any severance agreement:

● A noncompete clause - prohibits you from working for another company in the same industry.

● A release clause - requires you to sign a broad release of liability before receiving severance benefits. This means that you would not be able to sue your employer for wrongdoing related to your employment after signing the agreement.

● A whistleblower or anti-retaliation clause - requires you to waive your rights as a whistleblower if severance benefits are included.

● A confidentiality clause - prohibits you from disclosing information learned about your employer.

● Any provisions that require you to keep secret information learned during your employment with the company.

● A requirement that severance pay be reduced for workers’ compensation or unemployment.

● A requirement that severance pay be reduced if you choose to litigate a claim with your employer under any legal statute, such as the federal Age Discrimination in Employment Act (ADEA).

Before you sign any severance agreement, read it carefully and consider contacting an employment lawyer. An employment lawyer can ensure your severance agreement doesn’t include anything that could cause problems down the road.

Robinson Law Offices Can Help Negotiate a Severance That Works for You

If you are facing a termination, Robinson Law Offices may be able to help negotiate a severance agreement that works for you. We have extensive experience in this area and can ensure that you get the best possible deal. Contact us today to learn more.


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