What Should Employees Do Before Signing a Severance Agreement?

What Should Employees Do Before Signing a Severance Agreement?

You’ve received a severance agreement offer from your employer when you’re terminated due to layoffs or company downsizing. While the offer may seem straightforward, a severance package is a legal document designed to protect your employer’s interests. Before signing, it is essential to understand what you are relinquishing in return for the compensation offered. Before signing any severance agreement, it’s important to:

• Understand your legal rights: Know what you are entitled to by law versus what the company is offering.
• Identify your leverage points: Assess your specific circumstances to determine if you have grounds for a stronger offer.
• Scrutinize the release of claims: Be clear about which legal rights you are permanently giving up.
• Consider professional negotiation: A legal professional can help you negotiate terms that better protect your interests.

Here at Curlin & Clay Law, we want you to understand your rights when it comes to your severance agreement. Reach out to our team today for further guidance.

What Should I Look for When Reviewing My Legal Rights?

Understanding your baseline rights is critical. In Indiana, employers are not legally required to offer severance pay unless a prior employment contract dictates otherwise. If you are offered a package, the company likely wants something in return.

You should review the document for restrictive covenants that could hinder your future employment. Check for the following clauses:

• Non-compete agreements: This document restricts your ability to work for competitors. Indiana courts require these to be narrow in geographic area and time. Overly broad restrictions can be challenged.
• Confidentiality clauses: These prevent you from discussing company secrets or proprietary information. They must be reasonable so as not to unfairly limit your ability to find new work.
• Non-solicitation rules: These stop you from poaching clients or former coworkers for a set period.

It’s essential to understand the elements of employment agreements so you can protect your rights while maintaining professional integrity. If you find terms that seem overly restrictive or unclear, consulting a legal professional can help keep your interests protected and make certain that any agreement aligns with Indiana’s legal frameworks.

How Do I Identify Leverage Points?

Employers offer severance to minimize their legal risk. You may have more power to negotiate than you realize. You should consider your tenure, your performance record, and the circumstances surrounding your departure to see if you have any leverage points. You may also be able to find leverage in the following areas:

• Unpaid compensation: This includes any wages or commissions you have already earned, but have not yet received.
• Accrued benefits: Consider any paid time off that you have accumulated but not used.
• Potential legal claims: If you have experienced workplace discrimination or retaliation, these issues can be significant leverage points.

If your employer knows you have grounds for a valid complaint, they will be highly motivated to secure your signature on a release. This situation provides you with significant leverage. You can use this reality to negotiate more favorable severance terms, ensuring you are fairly compensated and your departure is on your terms.

What is the Release of Claims?

Nearly every severance agreement includes a section called the “release of claims.” By signing this document, you are formally waiving your right to sue your employer for any past issues that may have occurred during your employment.

It is crucial to read this section carefully, as it typically covers a broad spectrum of potential legal actions. Understanding what rights you are permanently forfeiting is essential to having a severance agreement that protects your interests. Potential actions you may be asked to forfeit can include:

• Wrongful termination: Claims that your dismissal was unlawful.
• Wage and hour disputes: Any disagreements over unpaid salary, overtime, or commissions.
• Discrimination or harassment: Your right to sue for mistreatment based on protected characteristics like age, race, gender, or for experiencing a hostile work environment.
• Retaliation claims: Actions against the employer for punishing you after you took a legally-protected action, such as reporting harassment.

Signing this release means you cannot pursue these or other claims in court later. Therefore, you must carefully weigh the value of the financial compensation offered in the severance package against the potential value and importance of any legal claims you may have. An employment lawyer can provide assistance in evaluating this trade-off to help you make a fully informed decision.

How Can I Negotiate for a Better Severance Package?

If you are dissatisfied with the current offer, you do have the right to negotiate. A severance offer is rarely a final proposition. An experienced lawyer can often negotiate on your behalf to secure a more favorable outcome. Consider these strategies when you sit down at the bargaining table:

• Ask for more time: You do not have to sign immediately, and can request further time to review the agreement offer.
• Request health insurance continuation: Ask the company to cover your COBRA premiums for a few extra months to bridge the gap between jobs.
• Discuss the characterization of your departure: You might negotiate to have your exit labeled as a resignation rather than a termination, which can help your future job search.

Taking a proactive and informed approach during severance negotiations can significantly impact your financial and professional future. By understanding your rights and considering your options, you can ensure a smooth process while still protecting your long-term interests. 

Protect Your Career Transition with Curlin & Clay Law

Receiving a severance offer is a pivotal moment in your professional career. Rushing through the paperwork can lead to unintended consequences that impact your livelihood for years. Taking a step back to evaluate the terms will help you make a sound decision.

Having a professional employment lawyer review the contract can make a significant difference. The attorneys at Curlin & Clay Law help employees in Indianapolis evaluate severance agreements and negotiate better terms. Contact us today to schedule a consultation and protect your legal rights.