If you are asked to leave your job involuntarily, your employer may ask you to sign a severance agreement—an agreement that, once you sign, will entitle you to a sum of money. On the flip side, you need to understand that the employer is seeking something in return for that payment, namely, “tying a bow” on its employment relationship with you and knowing that the employer can walk away with the comfort that its relationship with you is done. The mechanism through which the employer secures this piece of mind is a “release” of all claims you may have against the employer during the time you worked at your job.
WHAT IS A RELEASE?
A release describes the language the employer relies upon to confirm that you have no claims against your employer. Once you sign a release and accept the money from your employer, you usually have agreed that you will not sue your employer for anything that happened, including, for discrimination or unpaid regular or overtime wages.
BY SIGNING, DOES THIS ALSO MEAN MY EMPLOYER CANNOT SUE ME?
That is not always the case. In order for your employer to be prevented from coming after you for something that occurred during the course of your employment, the severance agreement would need to be a “mutual” release so that both parties agree that each is walking away. This is less common and many employers will not agree to a mutual release that also protects the employee from any claims by the employer.
CAN I TELL OTHER PEOPLE ABOUT HOW MUCH MONEY THE EMPLOYER PAID ME?
It is usually the case that a severance agreement will require you to not tell anyone (other than a spouse, lawyer, and accountant) about the fact the employer gave you money at the end of your employment. Often, there are penalties, including return of all the money the employer paid to you (and sometimes more) if you do not keep the severance agreement a secret.
ARE THERE OTHER PARTS OF THE SEVERANCE AGREEMENT I SHOULD KNOW ABOUT?
Yes, severance agreements almost always require that you not say anything negative about your employer (even though your employer may not be equally limited in what it can say about you). In addition, depending on your industry, you might not be allowed to work for competitors for a certain period of time. There are many other provisions—too lengthy to include here—that an employer may include in a severance agreement. While you may not be able to change everything the severance agreement includes, you should make sure you understand what you are signing and that you are not violating the severance agreement such that you find yourself tangled up with your employer even after you have moved on from your old job.
If you would like to discuss your situation with us, including whether you should sign an agreement with such a provision, please feel free to call or email us at any time. You will be on the phone with an attorney within 24 hours.