Understanding Employee Severance Agreement

A severance agreement is handed out by an employer when a worker has been fired. It is a way of ensuring that the employee does not take legal action. It often outlines pay, fulfillment or breach or discontinuation of a contract, insurance coverage, and more. One of the main points is to emphasize that the employee was let go for a reason that is considered acceptable and legal, and leaves no room for statements regarding discrimination cases.

The employee must agree with the severance agreement in full in order to receive all of its benefits. Service agreements also usually dictate that the individual is unable to take legal action against the company regardless of the circumstances.

It is not legally required to be issued a severance from your job by your employer. You are not technically entitled to a severance agreement, as t is essentially an agreement for additional money in exchange for a waiver. The law does not dictate that you must be paid out wages you are not owed, nor does it specify anything about receiving a bonus upon being terminated.

There are no laws that require severance agreements to be handed out by employers, but there are laws that attempt to control what employers can do, request, waive, and more. The specific law can be found below.

Title 2, Government of the State of California; Division 3, Executive Department; Part 2.8, Department of Fair Employment and Housing; Chapter 7, Enforcement and Hearing Procedures; Article 1, Unlawful Practices: 12964.5.

(a) It is an unlawful employment practice for an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment, to do either of the following:

(1) (A) For an employer to require an employee to sign a release of a claim or right under this part.

(2) (A) For an employer to require an employee to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.

(b) Any agreement or document in violation of this section is contrary to public policy and shall be unenforceable. To better understand and fully comprehend the laws listed above, you can read them here.

Severance agreements can outline civil violations that can be waived. These are essentially instances that involve liability or some two-party ideas. If a crime is in question, it cannot be waived. For example, if a coworker committed an act of violence against you and pulled a weapon, he could be charged with assault with a deadly weapon; you cannot be asked to waive the charge by your employer. Examples of common waivers include:

• Filing a lawsuit for wrongful termination or wrongful firing
• Filing a lawsuit for sexual harassment
• Filing a lawsuit for defamation
• Filing a lawsuit for discrimination based on any protected class, such as gender, race, religion, sex, pregnancy, sexual orientation, and more
• The ability to discuss or reveal the terms, conditions, contents, details, and other information in the severance agreement
• Discussion or revelation of any trade secrets, recipes, practices, and more
• Disclose of the circumstances leading to the termination or firing

This is but a small list of rights that can be waived. You should always consider pros and cons, as well as the benefits, of waiving your rights if you are faced with a severance agreement.

There are some rights that cannot be waived in a severance agreement and other requests that an employer cannot make. It is important to understand these details because many employers will place them in severance agreements and tell you that they are well within their rights in doing so. They often trust that their workers won’t be familiar with the law or will simply take their word for it that the company is acting legally.

Some of the rights that cannot be waived include:

• Right to claim earned wages that were not paid out, such as unemployment, holiday pay, insurance, and more
• The right to report crimes that were committed at the place of employment or by coworkers or superiors
• The promise to commit a crime, such as perjury or theft, in exchange for the agreement

Other times, the severance agreement can be considered unenforceable or illegal. For example, employers may intimidate the worker into signing a severance agreement by way of threats or fraud. The employee must sign the severance agreement on moral grounds and must not be forced into it.

Employers often draft severance agreements with the intent of getting themselves the best possible situation, such as by requesting you to waive all your rights to sue and also to not work in similar fields or for a similar company for a certain amount of time. This is generally problematic, as most people are specialists and comfortable, so not being able to work at a similar company would be ruining to some.

Examples of insertions to look out for include:

• Language that contains clauses for non-competition or non-disclosure, as your future job hunt may become severely limited and hindered if you cannot pursue a job in your field
• Statements that make you appear guilty or that say you were at fault for incidents and injuries, especially if you were not responsible for them.
• Claims that there was no harassment and violation that occurred by any party

You should always be on the lookout for your future opportunities and lifestyle. Severance can take care of you for a few weeks or months, but it will not last forever. You should pursue the income you deserve.