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Severance Negotiation

Employers routinely take advantage of the fact that employees are unaware of how much money they can actually obtain upon being terminated, and will usually do everything they can to avoid having to pay a terminated employee a reasonable severance.


But, what many employees don't realize is that negotiating a severance package with the assistance of an employment attorney often results in the employee receiving a significantly larger severance package from their former employer.


Our law practice is dedicated exclusively to employment-related matters, including matters involving severance. Through years of experience, we have picked up valuable insights and fundamental understandings about how severance package negotiations work, and we can use this knowledge and experience to help you. 

We will assist you with evaluating the strengths and weaknesses of your severance offer to determine if it is fair, and aggressively negotiate better terms on your behalf.

What is a Severance Package? 

A severance package is simply an agreement that governs the separation of employment between you and your employer. 


Separation may come about because your employer terminates you. This may be the result of a mutual parting of the ways between you and your employer, a corporate reorganization, a group layoff, a reduction in workforce, or perhaps a plant closure. 


In the typical severance package, your employer will offer you a benefit, usually in the form of wages to which you are not otherwise entitled. This benefit will be offered in exchange for you signing a release or waiver of any legal claims that you might have against your employer. 

Can I Negotiate a Higher Payout or an Enhanced Severance Package?

This is the most common question asked by employees who have received a severance offer, and the answer typically depends on two general rules of thumb: 

  1. Whether you have a valid legal claim against your employer; and

  2. How many employees are involved


First, if you have a viable legal claim against your employer (e.g. for discrimination, retaliation, or unpaid wages), the more likely your employer will be to negotiate the ultimate terms of your severance package, including the amount of money that might be paid out to you as part of that agreement. 


Second, the fewer employees involved in the separation, the more likely your employer will be to negotiate the terms of your separation (i.e. if the agreement involves only one or two employees who are being terminated). Conversely, the more employees that are involved in the separation, such as through a corporate reorganization, plant closure, or group lay off, the less likely your employer will be to negotiate the final terms and conditions of your severance. 


Bear in mind, every set of circumstances is different, and what you can actually expect to achieve through severance package negotiation must be determined on a case-by-case basis after consultation with an experienced Arizona employment lawyer.

What Should I Look for in a Severance Agreement? 

While severance agreements typically contain a lot of boilerplate and legalese, there are several things you should always look out for: 

How long do you have to review and sign the agreement? 

Most severance agreements provide for a period of 21 days to find an attorney, review the document, and sign it. Sometimes, however, you might be given up to 45 days to review and sign a severance agreement, which is required under federal law in the event of a group layoff. But, regardless of how many days you have to review the agreement, the time limit starts when you receive the document. So, do not waste time. Contact an Arizona employment attorney right away.


Is the severance offer fair or reasonable? 

Employers often base severance on length of employment and current salary, and they often behave like the formula they use cannot be altered. But, do not be deceived. With the help of the right lawyer, with the right skill set, you may be able to significantly enhance your severance package. 

Is your employer asking you to sign a non-compete or non-solicitation restriction?

You will want to know how your employer wants to restrict your future employment, for what duration, in what geographical scope, and in what capacity. An experienced employment attorney can help you evaluate what the proposed language would mean for you and your job prospects. 


Is your employer asking you to waive your claim to unemployment benefits?

Make sure there is language in your severance agreement stating that you are NOT waving your claim for unemployment insurance benefits, and that your employer agrees NOT to contest any claim for unemployment benefits. Including such language helps to clarify expectations for that process. 


Is there a neutral reference provision in the agreement?

Is there language in the agreement setting forth what your employer will tell your future prospective employers? This is commonly referred to as a neutral reference provision. It is generally the policy for most employers, in most industries, to agree to simply confirm the dates of your employment, your last job title or position, and if requested, your salary.


How will the benefits be paid out and treated under the severance agreement?

Sometimes benefits are paid out as wages over the course of a normal payroll schedule. Other times benefits are paid in a lump sum after the severance agreement is signed. This can have important tax consequences, as lump-sum payments under a severance agreement are typically subject to supplemental wage withholding, which is a slightly higher amount of withholding than your standard W2 wages

Other Things to Consider When Negotiating a Severance Package in Arizona

  • Can you delay the separation date? It is always best to remain employed for as long as you can, because it is typically easier to find a job while you have one.

  • Can healthcare and other benefits be extended? And if so, for how long? You should always ask your employer to pay your health benefits for as long as you possibly can.

  • Are outplacement services and job search assistance included in the severance offer? Separation from one employer does not mean that it cannot help you find your next one.

  • Are there any promises, practice policies, or contractual obligations that your employer has not fulfilled? Before negotiating your severance package, make sure you know what you are already entitled to receive. 

  • What does your employer want? Understanding what your employer wants from you can help you get what you want from it

​​Contact Robinson Law Offices to Assist You With Negotiatingg Your Severance Package


At Robinson Law Offices, we represent Arizona employees in nearly every aspect of labor and employment law. We review and evaluate all types of employment-related contracts, such as employment agreements, non-compete and non-solicitation agreements, as well as severance and separation agreements. To speak with an employment attorney, contact our office today.

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