Severance agreements, on the surface, sound like a great deal. The employee gets a lump sum payment which they can apply towards early retirement or time to look for a new job. As a rule, Santa Clara employers don’t offer them out of the kindness of their heart. Employers offer severance agreements because they need to downsize or because they want to replace higher paid older workers with lower paid younger workers.
The employer goal – release from liability
In some cases, the employer is offering severance pay as a settlement of claims an employee may have. In this situation, the employer will ask the employee to sign a release from liability document. Before signing the document, employees should speak with a skilled Santa Clara lawyer who can review the document. The lawyer should also review what rights the employee has. Many employees have legitimate work claims against the employer which can be worth a lot of money.
Some of the claims workers may have against an employer who is rushing to force a severance agreement include:
- Wrongful termination contests. Employers must comply with the terms of a written employment contract if there is one before they fire an employee. Employers generally can’t fire or threaten to fire anyone based on their race, sex, national origin, religion, age, pregnancy, disability, or other factors. They also can’t fire an employee who is asserting a legal right. Examples of legal rights include the right to file a whistleblower claim or the right to seek workers’ compensation.
- Creating a hostile environment. Employers generally can’t create work conditions that are so unbearable that an employee feels they have no choice but to quit. A common example is where a woman must endure constant sexual references and innuendo, or someone must work in an environment where they are separated from other workers because of the color of their skin or the way they look.
- Discrimination lawsuits. Employees generally have the right to file a claim against an employer who treated their opportunity for advancement differently than others based on the employee’s race, national origin, sex, religion, or color. Parents, if they meet the law’s terms, can usually ask for unpaid leave under the Family Medical Leave Act
- Pay disputes. Workers are entitled to all the income they’ve earned including overtime pay and accrued vacation pay.
- Sexual harassment and abuse claims. Employers who mistreat their workers based on their gender may be subject to federal or state complaints.
Wrongful termination and retaliation claims don’t just apply to the employee who is the direct object of the misconduct. A worker who is fired or harassed because he is willing to testify on behalf of another worker may also have a legal claim against the employer.
In wrongful termination and retaliation cases, the employee has the right to demand job reinstatement, back pay, damages set forth in any statute, punitive damages, and legal fees.
Financial and practical considerations to review before signing a severance agreement
An experienced Santa Clara severance agreement lawyer will also review and negotiate the following items:
- The employment contract. Managers, supervisors, and those with special skills often sign a contract for employment. The contract should set forth many issues including the value of their ownership interest if any, and their rights if the employment is terminated. Rights often include retirement benefits, stock options, insurance, and other valuable benefits.
- The amount of severance pay. A skilled lawyer understands when an employee can bargain for a larger payout and why a large payout might be justified.
- Tax Considerations. A skilled lawyer will review what federal, state, and local taxes are due on the severance pay lump sum. Alternative payout arrangements, such as deferred payments, may help reduce the tax obligations
- Insurance. A Santa Clara severance pay lawyer will review if the employee is entitled to COBRA insurance or any other health insurance
- Unemployment compensation. Ideally, the employee will be able to seek unemployment compensation and still receive his/her severance pay. The attorney should explain when employees can get both benefits and when they can’t.
The lawyer should also review with the employee the possible risk the employer may go out of business if any payments or retirement benefits are deferred. The Santa Clara lawyer will explain that once the release is signed, it’s very hard to change the terms of the release.
Call the experienced Santa Clara severance lawyers at Stephen Danz & Associates today
Employees need to speak with a skilled severance lawyer before they accept any payments. They may have the right to challenge the basis for the firing. They need to understand the long-term and short term financial, insurance, retirement, and tax consequences. To learn what your employment rights are, contact Stephen Danz & Associates at (877)789-9707 to make an appointment with a strong advocate. Se Habla Espanol.