Severance Agreements – What Does the Employer Want

Employers don’t give severance pay through the kindness of their hearts. They want something in return. They may offer severance to encourage older workers to leave so they can replace them with younger cheaper workers. Employers may offer severance because a company needs to downsize. Often employers want to buy off employees who they think might have a legal cause of action against them.

Release of Liability Forms

Employers who offer compensation usually want the employee to sign a “release of liability” form. These releases should be reviewed with an experienced California severance agreement attorney before the employee signs the release. Employees may have the following rights that they should not easily waive:

  • The right to contest a termination if it is discriminatory, violates a written contract or violates other laws or policies.
  • The employee may have a right to file an employee claim against the employer for any kind of wrongful or adverse treatment. If an employee has a claim, he/she may be entitled to:
    • Additional pay and benefits
    • Statutory damages
    • Punitive damages
    • Legal fees – the employer might be required to pay the employee damages
  • The right to file a claim for discrimination based on race, gender, national origin, sexual preference, gender, pregnancy, disability, and other factors.
  • The right to file a retaliation claim. Employees often have the right to file a lawsuit against an employer if they are fired or adversely treated because the worker filed a False Claims Act case, asked for workers’ compensation benefits, or for other reasons.
  • The right to file other claims such as claims of sexual assault or abuse

Additionally, employees should understand that the filing of wrongful termination, employee discrimination, retaliation, or other claim helps other employees as well as that employee.

Practical items your lawyer will review about the release and severance pay

When reviewing the releases and the severance agreement, the California employment attorney will ask you and the employer about how other employees have been treated in circumstances that are similar. The lawyer will review:

  • All relevant employment contracts
  • The possibility the terms of the agreement can be negotiated. For example, more compensation in order to get the client to sign a broad release.
  • The tax consequences. Generally, severance pay is considered income which means the employee will have to pay local, state, and federal income taxes on the amounts paid. An experienced severance pay lawyer will review whether the agreement can be structured to reduce the amount of taxes due.

If the employer wants to make payouts instead of one lump sum payment, the attorney will review:

  • How payouts affect your right to ask for unemployment compensation
  • How payouts affect whether you keep your old insurance or must switch to COBRA or a new policy
  • Whether there’s any risk the employer might go out of business before you can be paid in full

The attorney will explain what rights you are giving up by signing the release. Often, employees learn that there were rights they had that they didn’t know about.

Employees should understand that once the sign a release, it’s very difficult to overturn the release – even when fraud, duress, or undue influence was used to pressure the employee to sign.

Speak with an experienced California severance and release agreement attorney before you sign any contracts

If an employer is offering a severance package, it’s a good bet the employer wants something in return. Employees do have rights. These rights may include the right to file a lawsuit against the employer for wrongs to the employer. The law office of Stephen Danz & Associates has the experience and resources to help you get justice.

For help now, call (877) 789-9707 to schedule an appointment with a strong advocate. Se habla espanol.