Severance and Employment Agreements
Daniel A. Menendez is experienced in negotiating severance agreements, employment agreements, arbitration agreements, non-compete agreements, non-disclosure agreements, and other contracts related to employment.
Severance and employment agreements can result in the waiver of valuable rights and agreement to restrictions on future employment. It is critical to have an experienced attorney draft, review, and negotiate a severance or employment agreement to ensure the best possible severance package that protects your rights.
Daniel A. Menendez can also assist in determining whether the termination of your employment gives rise to any legal claims. If your former employer terminated you for an unlawful reason, you should not waive your right to bring a claim, including a potential claim of wrongful termination, discrimination, or retaliation. Most, if not all, severance agreements require the waiver of potential claims -even those that you do not even know about!
What Are Some Rights That Cannot Be Waived?
Some severance agreements contain unlawful provisions that interfere with employee rights under anti-discrimination, anti-retaliation, and whistleblower protection laws. Before entering into a severance agreement, consult with an experienced attorney to evaluate whether your former employer is violating your rights. Examples of improper or unlawful provisions in severance agreements include:
- a waiver of a claim that would arise or accrue subsequent to the effective date of the agreement;
- a waiver of the right to file a charge of discrimination or retaliation;
- a waiver of vested right under a benefit or pension plan;
- a waiver of the right to testify, assist, or cooperate in an investigation of a charge of discrimination or retaliation;
- an agreement not to report a violation of law or regulation to law enforcement or regulatory agencies;
- an agreement not to compete with the former employer.
What Are Areas Commonly Addressed In Severance Agreements?
- Severance Payments: Some employees are already entitled to severance payments and benefits as a result of employment contracts or company policy. If this is the case, there is no need to sign a severance agreement to receive the base monies and benefits laid out in the employment contract or company policy. An attorney can help negotiate additional monies and benefits, and determining whether the amount of severance is within the standard for the employee's industry or profession.
- Money Owned by the Employer: Unused vacation, paid time off, wages, and reimbursed expenses must be paid regardless of whether an employee signs a severance agreement. Signature of any severance agreement should include a description of these monies, as well as a date by which they will be paid, in order to avoid any claim of waiver.
- Employee Benefits: A severance agreement should explain any benefits an employee will receive after separation of employment. These benefits include the continuation of health coverage and the right of an employee to stay on an employer's medical plan under federal COBRA laws.
- Release of Claims: Severance agreements serve an important purpose for employers: having an employee release all legal claims against the employer. The general release contained in most severance agreements typically includes the release of all claims -including those of which the employee may be unaware pursuant to waiver of California Civil Code Section 1542. Some potential claims should not be released under severance agreements, including: any COBRA rights, the right to seek unemployment insurance benefits, the right to vested pension benefits, stock options, other company benefits, the right to enforce the severance agreement, and indemnification rights relating to prior employment.
- Employment References and Non-Disparagement: Severance agreements typically include a clause barring disparagement of the employer by the former employee. A well-negotiated severance agreement should contain a reciprocal clause prohibiting the employer from disparaging the former employee. This clause may include how the employer must handle references by potential future employers.
- Integration or "Zipper" Clauses: Only the terms written in the severance agreement are binding on the employer or former employee. This means that any oral promise for additional monies, benefits, or other terms are not binding if they are not in the severance agreement. A well-negotiated severance agreement ensures that all of the promises between the parties will be legal and enforceable.
- Confidential and Proprietary Information: Employers usually use severance agreements to prevent former employees from using proprietary and confidential information in their future work. An attorney can work with the employee to identify and document the return of all proprietary information. An attorney can negotiate the ability to disclose certain information that is valuable to the employee (such as performance evaluations) so it can be used in future employment or business.
- Non-Compete and Non-Solicitation Agreements: Non-compete agreements are generally invalid in the State of California. These agreements try to prohibit the employee from competing with the employer in certain areas for a specific amount of time, and from hiring other workers away from the employer. An experienced attorney can negotiate monies or other benefits for employees who are willing to accept these restrictions.
Before signing a severance or employment agreement, consult with an attorney experienced in this area of law. An experienced employment attorney can help protect employees, including executives and professionals, from the risk of waiving rights unnecessarily or leaving money on the table.