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Separation and Severance Agreements | End Of Employment | What You Need To Know

Jun 16 2021

Josh Goodbaum: Hi, Amanda.

Amanda DeMatteis: Hi, Josh. What are we going to talk about today? 

Goodbaum: I thought we could talk about separation agreements or severance agreements. A lot of Connecticut employees come to us having been just laid off. They’re notified of the layoff, and then they get this complicated legal document, and they’ve never seen anything like this before – they’ve probably never been laid off before – and they’re freaking out. They don’t know what to do; they email us or they call us; and they say, “Help.” What do you say?

DeMatteis: Well, first thing I say is, “Take a deep breath; try to relax.” I know you’ve heard that one before.   

Goodbaum: It’s amazing how the advice we give to almost everybody who comes into our office is, “Take a deep breath – we’re going to figure this out.” And usually, we do.

DeMatteis: Well, we see it every day, Josh; a lot of Connecticut employees don’t. And for most people, this is the first time they’ve ever been in a situation like this – and it’s scary. But while it may be the first time you’re going through it, this is the stuff we handle every day. So, we’ve been here, a lot of other Connecticut employees have been in this position as well, so we’re going to get through it. But the first thing you need to do is be able to think clearly, right? And that starts by taking a deep breath. 

Second – another one that’s not a surprise – is reading, right? Let’s read what the separation agreement says. What is the company offering you in exchange for signing this document and releasing any and all claims you may have against them? That’s the meat and potatoes of this thing, right? In order for you to get whatever it is that they’re going to give you in exchange for you signing this document, you have to forego rights. So you can’t sue them for discrimination or retaliation or something else, and you want to make sure that whatever it is that they’re giving you is good enough in exchange for that really big piece of satisfaction, I guess you’d call it, that you’re giving them because they can rest easy and say, “This employee can’t come back and sue us now.” So, read this thing, understand what it says. 

A lot of people say, “This is fine with me. I think I’m just gonna sign it.” While our advice would always be, “Look, this is a legally binding contract – talk it over with an employment lawyer,” some folks say, “I don’t want to.” Maybe I can’t afford it; maybe I don’t have the money to spend on a consultation or to talk to a lawyer, so can’t I just sign it myself? And that is an interesting piece that we wanted to cover. 

Josh, what do you think about that?

Goodbaum: The answer is yes: if you’re a sane, competent adult, you can make any agreement that you want to. I think the better course is to think about talking with a lawyer at least under the following circumstances: 

Number one: You think something illegal or at least really unfair happened, and you want to get a lawyer’s take on it. So, you think you were subjected to discrimination of some kind; you were harassed; you were retaliated against; you had a contract that was breached. Something about this just doesn’t feel right to you. If you’re going to give up your legal claims, if you’re going to say to them, “I will never sue you about anything that happened with my employment,” you may want to talk with a lawyer about whether what you think is unfair is actually something that’s illegal. 

Another thing is, when you read the agreement, if you see statements in there that you think are untrue, probably not a good idea to put your name on it. For example, most separation agreements these days say something like, “I got all the leave that I was entitled to and asked for.” Why? Because you can’t actually release certain kinds of claims under the Family and Medical Leave Act (FMLA) or other kinds of leave that you would be entitled to. So, instead, what employers do is they ask you to certify that you got all the leave that you asked for. Well, imagine that you didn’t, right? That would both be you signing your name to something that’s false and also would be – it would be an indication that you’ve probably got a legal claim that you should be talking with a lawyer about. 

Another red flag that might lead you to talk to a lawyer is that the agreement contains what we call post-employment covenants. So post-employment (meaning after the end of your job) and covenants (meaning promises, basically promises not to do certain things). Frequent post-employment covenants we see include non-disparagement: you’re never going to say anything bad about this employer, or any of its people, ever again. Some people are fine with that; some people, that makes them uncomfortable. Another one – maybe a little more restrictive one even – is a non-compete. You never had a non-compete during your employment, but now they’ve offered you a separation agreement that says, “You’re not going to work for our competitor for two years.” Well, that’s something you really need to consider before you just say no problem and sign on the dotted line, right? 

I meet with a lot of employees talking about proposed separation agreements and I’ve got to tell you: sometimes my advice is, “This seems like a reasonable proposal. I don’t think you have any claims. I’d sign the thing.” So talking to a lawyer doesn’t necessarily mean that they’re going to encourage you to file a lawsuit. But it also might mean that you have claims that you need to know about, and it might be an opportunity for you to negotiate with the employer to get a more substantial separation package. And if they’re not willing to offer one, and you have good claims, it might be that you ultimately want to make the decision to move forward into a litigation process. That’s something you can talk about with a lawyer, but merely going to talk with a lawyer doesn’t mean any of those things are going to happen. You as the employee – you as the client – remain in control at all times of all those decisions. 

So, those are some things to think about when you receive a separation agreement or a severance agreement. And hopefully, that’s helpful advice for people. 

DeMatteis: And remember, it’s always best to talk to an employment lawyer before you sign. After you sign this thing and it’s an enforceable contract, there’s probably very little that we can do to help you. So, if you have questions and you’re thinking, “You know what? Maybe I should get some more advice on this,” don’t just sign it and get the advice later. 

The other thing to be really cautious about is a lot of separation agreements and severance agreements – they’re only good for a certain amount of time. The employer may say, “You have 21 days to sign this agreement,” or, “You have 45 days to sign this agreement.” Don’t sit on it and call us on the 44th day. You want to make sure that you’re giving us and yourself enough time to consider these things, understand this contract, and make an educated decision. 

Thanks so much for watching. We’ll see you next time. 

Goodbaum: Take care!            

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Separation and Severance Agreements

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