Severance Agreements: What To Know Before You Sign

Leaving any job involuntarily is difficult. Even if the job wasn't a good fit for you, it can still be uncomfortable or embarrassing to know that you were "let go." You also likely have immediate concerns about how to stay afloat financially while you look for a new job or transition to retirement.

When you are in this situation, the offer of a severance package can seem very attractive. But before you sign on the dotted line, make sure to read the agreement carefully — ideally, in consultation with an attorney. If you don't carefully review the agreement, you may risk losing more than what the severance package is worth.

What Rights Are You Trading Away?

Employers almost never offer severance agreements out of kindness or compassion. Typically, they offer severance packages because they understand that they may need some protection from liability.

When you sign an agreement, you are almost always accepting money or some other benefit in exchange for waiving your right to sue the employer. Therefore, if you are leaving the job because something bad happened to you (discrimination, harassment, etc.), accepting an agreement may not be in your best interest.

Even if you were fired "for cause," the fact that you are being offered a severance agreement often indicates that the employer understands that it is not blameless.

In addition to waiving your right to sue, the severance agreement could contain other, less obvious provisions which may nonetheless cause you harm. Examples include:

  • Adding a non-compete agreement that makes it difficult or impossible to find another job locally in your field
  • Adding language in which you agree to give up your pension rights
  • A non-disparagement agreement that prevents you from disparaging the employer but does not prevent the employer from disparaging you to future employers
  • A confidentiality agreement that prevents you from discussing the severance agreement but does not prevent the employer from doing so
  • Adding language in which you agree to give up valuable stock options, insurance coverage, retirement contributions or other important benefits

As you can see, severance agreements are not simply a benevolent parting gift. In fact, the employer may be getting a lot more in the deal than it is giving away.

How EllisonLegal Can Help You

If you've been offered a severance package, the employer must give you an adequate amount of time to look it over and consult with an attorney before signing it. If you contact my office, I can review the agreement with you, explain what all provisions mean and discuss your options. Those options include accepting the severance agreement as is or attempting to negotiate better terms. An additional option, if illegal discrimination can be proven, is to reject the agreement and fight the discrimination.

Contact An Experienced Employment Lawyer Today

Based in Ann Arbor, EllisonLegal serves clients in Ann Arbor, Detroit and surrounding communities. To discuss your rights and legal options, call me at 734-887-6534 or send me an email.