Signing a Severance Agreement Can Affect Your Rights

When your employment comes to an end through a layoff, resignation, or termination and your employer offers a severance agreement, you are placed in a time-sensitive, emotional decision – whether to sign it. That decision can drastically alter your finances and possibly future job opportunities.

Exercise caution if you are being pressured into signing a severance agreement on the spot. You may be entitled by law to a specified amount of time to consider the severance agreement before signing it.

For example, under the Age Discrimination in Employment Act (ADEA), an employee over the age of 40 who is laid off is entitled to 21 days to consider whether to sign a severance agreement. If part of a group layoff, the employee is entitled to 45 days under the Older Workers Benefit Protection Act (OWBPA), which also provides a seven-day right to revoke period after signing.

What is a severance agreement?

A severance agreement is a contract created by your employer that typically requires you to waive your right to sue in court for wrongful termination based on age, race, sex, disability, and other types of discrimination in exchange for a specified amount of severance pay.

If the employee signs a such a waiver, even if he or she may have been a victim of illegal discrimination based on race, color, religion, sex (including gender identity, sexual orientation, and pregnancy), national origin, age (40 or older), disability or genetic information, the employee is precluded from filing a lawsuit.

In addition to the waiver of rights, a severance package may include:

1. A non-disclosure agreement requiring the employee to refrain from talking about the job or the circumstances of his or her termination from employment.
2. A non-compete agreement precluding the employee from accepting a similar job for a certain amount of time in a specific geographical area.
3. A non-disparagement agreement that requires the employee to refrain from communicating negative facts or opinions about the employer or the employee’s job. This includes social media posts.

It is plain to see that an employee who signs a severance agreement may give up many rights in exchange for the severance pay offered by the employer. As with all contracts, it is important to know what you are signing when you sign a severance agreement – and to be sure you agree its terms. If an employee voluntarily accepts the terms of a severance agreement, generally he or she must abide by those terms.

Should you consult a lawyer before signing a severance agreement?

In some cases, the terms of the proposed severance agreement may be negotiable. You should consult an attorney to help you negotiate better terms with your former employer.

In other cases, an employer may be adamant that the terms of the severance agreement are non-negotiable. However, you can consult with an attorney to discuss countering your employer’s offer with a demand for additional financial compensation in exchange for waiving your rights.

Before signing a severance agreement, it is important to determine whether the employer is offering something of value – something to which you are not already entitled – in exchange for your waiver of rights. For example, if your company has for many years provided severance pay to laid-off employees and instituted a policy regarding severance pay, you may be giving up your rights for nothing in return.

The financial and emotional pressure to sign a severance agreement can be considerable.

If your employer gives you a severance agreement to sign, you should contact an experienced employment attorney to review it. Murphy Law Group focuses exclusively on employment law. We will review your severance agreement and explain your rights. We can potentially help you to secure a more financially beneficial severance package. Email us at murphy@phillyemploymentlawyer.com or call (267) 273-1054 for a free consultation.