A severance agreement is a contract outlining the rights and responsibilities of an employer and employee if the employee’s job is terminated. A severance agreement may also be referred to as a termination agreement or separation agreement. Severance agreements typically include restrictive covenants and a severance package specifying monetary payments and health benefits.
Restrictive covenants may include:
- Non-compete clauses restricting the employee from working for a competitor
- Confidentiality clauses forbidding the employee from disclosing company-confidential trade secrets, sales data, or other valuable information
- Non-disparagement provisions
The severance agreement may offer employees severance pay in exchange for waiving their rights to file a wrongful termination lawsuit.
Negotiating Severance Agreements
At some companies, it is standard practice for new hires to be asked to sign non-compete clauses and/or termination agreements when they start a new job. However, other employers only ask employees who are likely to sue them to sign a release. Your employer must adhere to the following guidelines if they present you with a notice of termination and a severance agreement:
- Your employer must clearly and specifically state in writing the rights that you are waiving
- Your employer may not coerce you to sign the agreement or threaten to withhold wages that you have already earned
- Your employer must give you adequate time to review the agreement before signing it
- If you are over 40 years old, the amount of time to which you are legally entitled is specified in the Older Workers Benefits Protection Act (OWBPA)
Oftentimes, workers facing a lay-off or termination are under the impression that severance packages are non-negotiable. Employers assume that most employees will accept what they are offered, even if it is less than they deserve. If your severance agreement includes a clause asking you to give up your right to sue your employer, keep in mind that obtaining that guarantee may be worth a substantial amount of money to your employer.
Special Considerations for New Jersey Employees
In March 2019, the New Jersey Law Against Discrimination (NJLAD) was amended in two ways. First, it invalidates nondisclosure agreements that prohibit employees from revealing details about discrimination, retaliation, or harassment claims. In other words, terminated employees cannot be forced to keep silent about any settlements they may have received from their employer as a result of a sexual harassment or discrimination claim. Second, employers cannot retaliate against employees who refuse to waive their rights to discrimination, retaliation, or harassment claims.
How Can an Employment Lawyer Help You Negotiate a Severance Agreement?
Signing a severance agreement can have serious and long-lasting consequences. An employment lawyer can help you determine if your severance agreement is legally enforceable, including whether it violates discrimination laws regarding a reduction in force (RIF). Employers may try to hide age discrimination by announcing a lay-off or RIF. In addition, the laws in New Jersey were changed in 2019, impacting the enforceability of some clauses in standard severance agreements. An experienced employment lawyer can explain what you are signing and suggest modifications so you can negotiate and obtain a severance agreement that better serves your interests.
Cherry Hill Employment Lawyers at Sidney L. Gold & Associates, P.C. Understand New Jersey Employment Laws and Can Advise You of Your Rights
If your employer presents you with a severance agreement, resist the temptation to sign it immediately. Protect your rights by calling the Cherry Hill employment lawyers at Sidney L. Gold & Associates, P.C. We are dedicated to ensuring that terminated workers obtain the best outcome possible. To schedule a free consultation, call us at 215-569-1999 or contact us online. Located in Pennsauken, New Jersey, we serve clients throughout South Jersey, including Cherry Hill, Haddonfield, Marlton, Moorestown, and Mount Laurel.