With the recent announcements from Alphabet, Facebook, Goldman Sachs, Google, Microsoft, Twitter, and others of massive layoffs and severance agreements. Since a lot of employees are going to be receiving severance agreements soon, in this article, we identify 5 of the most important clauses to look out for when reviewing a severance agreement – whether you work in New York City, Cleveland, Ohio or other communities.
1. Consideration
This is what you are getting in exchange for signing the severance. Every terminated employee should read their severance carefully, because this can come in several forms – not just cash compensation. Companies also offer health insurance coverage (usually by paying for COBRA), outplacement services, and other benefits in addition to money. That being said, we believe that the monetary compensation portion is by far the most important – everything else, health insurance, outplacement, etc., can be purchased with money.
2. Restrictive Covenants
Is the employer really letting you go? Or do you remain bound by certain restrictive covenants such as non-competes, non-solicits and non-disclosure agreements. Did you previously sign a restrictive covenant? If so, look to see if it is “incorporated by reference” into your severance agreement. For more on this subject: Does my severance agreement supersede my noncompete?
3. No Re-Hire Clause
Can you come back to the employer? Sometimes, you cannot. No-rehire clauses are fairly common. And, just because you and the company agree that the company is not required to re-hire you, it certainly does not mean that it cannot – if you want to come back and the company wants to rehire you, there is nothing preventing this (except for a lock-tight no-rehire clause, so look out for one).
4. Payment Terms
Are you being paid in a lump sum or over time. This has tax implications and may even impact your ability to collect unemployment.
5. References
Just about every reputable company has a neutral reference policy, but it is definitely in your best interest to know exactly what will be said about you.
We Can Help You Secure a Fair Severance Agreement
At Granovsky & Sundaresh PLLC, our experienced severance attorneys are strictly focused on making sure each of our clients is empowered throughout the severance process.
For a consultation, call us in New York City (646.524.6001) and Cleveland, Ohio (216.600.7994) or contact us any time. We will help you determine whether your agreement serves your best interests and whether you should attempt to negotiate better terms.