Severance Agreements

Moving severance agreement law forward

Leaving a job is no longer as simple as turning in two weeks’ notice, collecting a final paycheck, and moving on. These days, employees who are laid off, fired, or let go for some other reason often are asked to sign severance agreements. This can happen even if an employee resigns.

At Burnette Shutt & McDaniel, our experienced employment law attorneys help employees make sure any severance agreement protects their legal rights. Certainly pay is a point that should be included in any severance agreement. Even that can be tricky: Will the pay be a lump sum or a continuation of salary? And there are other factors to consider as well:

Federal WARN Act Compliance: The Worker Adjustment and Retraining Notification Act requires companies to notify employees of mass layoffs or facility closures. At times, though, companies will offer severance packages in lieu of adequate notice.

Benefits continuation: Certain levels of continuing healthcare benefits are guaranteed under federal ERISA law and programs such as COBRA. If severance pay is taken as a salary continuation, rather than as a lump sum, different requirements come into play.

Noncompete agreements: Though courts increasingly frown on these agreements, which bar employees from working for competitors for a certain period of time, the legal landscape is constantly shifting on this issue.

Nondisclosure agreements: These are aimed at preventing former employees from revealing confidential information about a company. These, however, have at times been challenged if they prevent whistleblowers from exposing fraud or wrongdoing.

Nondisparagement clauses: Similar to nondisclosure agreements, these provisions prevent employees from making derogatory comments in public forums or on social-media sites. These provisions also have been successfully challenged if they’re overly vague. The National Labor Relations Board also has challenged these provisions if they interfere with an employee’s right to engage in a protected activity, such as joining a union organizing campaign targeting a former employer.

Waivers of legal claims: Often, companies ask employees to waive any future claims of legal damages. There are limits, though, to what companies can ask. Typically, workers’ compensation claims and claims through agencies such as the Equal Employment Opportunity Commission cannot be waived.

That’s why it’s always a good idea to have an experienced, skilled attorney review any severance agreement you’re considering. The employment lawyers at Burnette Shutt & McDaniel will examine any proposed deal carefully with a goal of protecting you now and in the future.