• Marc Kroop

Severance Pay Traps You Can Avoid By Seeking Help From An Experienced Employment Attorney

If you have received notice that you have been laid off and that your employer wants to pay you a few weeks, or, perhaps even a few months of severance pay under the condition that you agree to terms and waive your right to bring any claims against the employer in the future, you should seek the help of an attorney that specializes in employment law.

So many severance agreements we review provide little or no consideration for the employee. The employee, by signing the severance agreement, may be giving up rights that far exceed the small amount of severance pay offered by the employer. In some cases, employer severance agreements even contain onerous or illegal terms.

In California, perhaps the biggest red flag is a severance agreement that contains a "non-compete" agreement. Any severance agreement that forces a California employee to remain on the sidelines for any period of time in return for severance pay is void against public policy.

In some cases, employers will include "non-solicitation" language in their proposed severance agreements. Non-solicitation language typically prevents an employee from speaking to the employer's clients or customers for some period of time in the future. These non-solicitation agreements can have the same impact as a non-compete agreement and may be equally unenforceable. Currently, we see fewer agreements with traditional non-compete language and more employers trying to accomplish the same goal of a non-compete agreement with a non-solicitation agreement.

Next, while rare, severance agreements that provide your salary, commission, bonus, vacation pay or other earned wages as consideration for the severance agreement are suspect. The consideration you receive for waiving your right to bring claims against your employer must be new consideration, not money you have already earned. Some employers will falsely dispute that you are owed certain wages and attempt to force you to accept a lower amount than you are owed in the context of a severance or separation agreement. If this is the case, you should consider not signing the agreement. Instead, you should consider immediately seeking the help of an experienced employment attorney. By signing such a severance agreement, you may have to go through a lengthy and risky process to invalidate your signature on the agreement in order to collect the full amount of wages owed to you by your employer.

If your severance agreement makes you responsible for "reasonable cooperation" with your employer's future investigations or litigation that should also be a reason for concern. Such provisions typically do not include reimbursement for your travel costs or time. What the employer may view as reasonable cooperation, may not be in your best interest. Any open ended agreement for you to donate your time to assist your employer with its legal issues without adequate compensation, post-termination, should be negotiated.

The claims you are allegedly releasing in your severance or separation agreement may be cause for concern as well. For instance, some severance or separation agreements will contain broad release language stating that you have waived your right to bring any "administrative claims" or include release language for non-waivable claims. Such release language does not impact your right to file a claim for unemployment benefits, force you to forego your workers compensation claim or prevent you from filing a claim of discrimination, harassment or retaliation with the Equal Employment Opportunity Commission. Your employer should be willing to acknowledge your rights as an employee, in writing, in the severance agreement.

Equally, if you are over the age of 40 and receive a review period of 21 or 45 days to consider your severance agreement, you should definitely consult with an experienced employment attorney. In certain cases involving the layoff of more than one employee, in order for you to waive your right to file an age discrimination claim, specific rules apply. In some cases, you may not have received proper notice of your rights, the correct amount of time to review the severance agreement or information that is required to help you evaluate whether you have a claim for age discrimination. We review many severance agreements that do not provide adequate waivers for employees over the age of 40. Invalid age discrimination waivers should not be signed by you even if they can be voided after they are signed.

If you are seeking review and an explanation of your separation agreement and want to know more about your rights as an employee, we can help. Kroop Labor Law's managing attorney, Marc G. Kroop has reviewed and negotiated the terms of hundreds of severance and separation agreements for employees in the state of California. Most severance and separation agreements contain standard terms that can be reviewed and explained to you in a nominal amount of time. If you have a severance agreement that requires review and explanation, call Mr. Kroop direct at (925) 989-8264. Alternatively, you may email us a copy of your severance agreement to info@krooplaborlaw.com to obtain our short estimate of time to review your severance agreement.

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