When employers reduce their workforce, whether it's by one employee or through a mass layoff, they may offer terminated employees a severance package. Severance packages typically provide you with a lump sum of money, continuation of your health insurance, and other employment benefits. Since an employer isn't typically obligated to give you a severance package, receiving one usually means that you have to sign a severance agreement to get it.
Severance Agreements Usually Limit Your Right to Sue
Almost all severance agreements will include terms, which if you agree to, prohibit you from filing most types of lawsuits against your employer after receiving your severance package. However, this isn't always binding on you, and there are times when you can sue your employer despite signing the severance agreement and taking the package. Courts decide this on a case-by-case basis, considering things like: Whether you fully understood what you signed, whether you had time to review the agreement, whether you negotiated the severance.
Agreements Can't Stop You From Filing a Discrimination Complaint
Employer severance agreements cannot limit your right to file a discrimination complaint with a government agency like the federal Equal Employment Opportunity Commission. You can file a complaint if you think you were fired or were forced to deal with a hostile work environment because of your race, religion, skin color, gender, national origin, disability, or age. A complaint is different than a lawsuit, but government agencies still may be able to recover damages from your employer on your behalf.
Employees 40 and Older Have Additional Rights
A federal law gives more protection to employees 40 and older who are offered a severance agreement. They have 21 to 45 days to review the agreement, and the employer cannot withdraw the offer during this time. Also, the agreement must inform terminated employees of these rights. If it doesn't, the employee can take the employer to court for violating federal law.
You May Be Able to Negotiate Your Severance Agreement
Your employer's offer of severance in exchange for signing the agreement may be a strategic move if the company suspects you will sue it after being terminated. When you have a legal claim that you could pursue against your employer, you're in a good position to negotiate a better severance package or hire a lawyer to conduct the negotiations for you.
An Employment Lawyer Can Help
The law surrounding severance agreements is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. We hope you found it useful. For more detailed, specific information, please contact an employment lawyer.