Severance is a term for any compensation given to an employee whose job has been terminated. In addition to financial compensation, a severance package may include medical, dental, life insurance, and outplacement services. Severance packages are a matter of company policy and the law does not require severance pay to employees whose jobs are being eliminated. Most companies will offer compensation based on tenure. Many also offer to assist with the transition. Additionally, it is customary to have the employee sign a waiver or release in exchange for the severance package.
Signing a Waiver
By signing a waiver or release, the employee gives up the right to sue the employer for any legal claims listed in the waiver. The law does require that the employee have time to read the waiver and seek legal counsel if desired. The conditions of the severance package may be negotiated by the employee. The waiver must also be written in a way that a reasonably educated employee can comprehend it or it may be considered invalid. If the employee is over the age of 40, the waiver must comply with rules set out by the Equal Employment Opportunity Commission (EEOC) in the Age Discrimination in Employment Act (ADEA).
When faced with accepting a severance package, individuals are strongly advised to enlist the help of a qualified employment lawyer to review the waiver before signing anything. A skilled negotiator can help obtain the best package available up front.
Discrimination and Title VII
If the waiver was already signed, but the employee discovers that discrimination may have been a factor in termination, he or she still has the option to sue. Discrimination is prohibited under Title VII of the Civil Rights Act of 1964. It is therefore an employee’s statutory right to be able to sue for discrimination. The EEOC does not consider statutory rights to be waivable. Therefore, it may still be possible to file charges with the EEOC provided the complaint is made within the statute of limitations for discrimination or wrongful termination. Employees who file a complaint with the EEOC are not required to return severance pay.
There are other circumstances under which a waiver can be deemed invalid. For example, if a severance package does not deliver anything to the employee in exchange for signing the waiver, the waiver will not be valid. In other words, the employee may be already entitled to severance pay, so in return for signing the waiver there must be an additional exchange of compensation. The employee is not required to sign anything to receive what he or she is already owed.
Coercion, or pressure to sign a waiver may invalidate it. Losing a job is traumatic and the employee must be given time to consider the agreement and consult an attorney if need be. A situation in which an employee is pressured to sign a waiver on the spot or lose any hope of severance pay is unfair and coerced.
ADEA waivers have special rules of compliance and the employee must be informed about the rules in writing. Non-compliance can result in the waiver being invalidated.
South Jersey Discrimination Lawyers at Sidney L. Gold & Associates, P.C. Advocate for Victims of Wrongful Termination
If you feel you have been wrongfully terminated, you may be able to recover damages from your former employer. Contact us online or call 215-569-1999 to talk to an experienced South Jersey discrimination lawyer at Sidney L. Gold & Associates, P.C. about your case. From our Philadelphia office, we proudly serve clients throughout South Jersey and Pennsylvania.