Employment Law Blog

Severance Packages – Key Points for Every Agreement

A severance package is designed to ease your transition out of the company. Your employer wants to make sure you leave quietly and you want to obtain a cushion to hold yourself over until you find a new job. The points below are important to anyone trying to evaluate a severance offer.  If you need assistance, contact our lawyers today. 1. Understand the Quid Pro Quo of the Severance Package The quid pro quo of a contract is the heart of the deal – the exchange of value. In reviewing your severance package, you need to understand what you are getting and what you are giving up. In most severance packages, you will be receiving a payment of money, possibly some health care coverage, stock options, and other things of value in exchange for your promise to leave the company and waive your right to sue them for anything or say anything bad about them. That is usually the quid pro quo of a severance package. Make sure you understand exactly what you are getting and what you are giving up. 2. The Money Most every severance package contains a promise to pay money. Typically, the money is paid out as salary over a period of time. For example, your severance package might say that you will receive your salary for three months after your last day in the office. The money component of a severance package is almost always discussed in terms or weeks or months of a person’s salary. Be sure to check your agreement so you understand how much money is being paid to you. Remember, you can always ask for more money. If your severance package states that you will receive three additional months of salary after you leave, you can always ask them to increase the offer from three months to six months. You don’t need a reason for asking for more. But if the company asks why you want more money, you can say that you need more because you expect that it will take you more time to find a job. 3. Health Benefits in a Severance Package Your employer will be required to offer you COBRA benefits. COBRA refers to a federal law (Consolidated Omnibus Budget Reconciliation Act of 1985) that requires companies to offer health insurance to terminated employees for 18 months at the corporate rate. For example, if you currently receive health benefits that cost $500 a month through your employer, your company is required under COBRA to offer this same health insurance policy to you at the same price of $500 a month for 18 months. Many severance packages include an offer to make your COBRA payments for a period of time or simply continue your existing health benefits for a period of time and defer the start of the COBRA period. Check your severance package to see if your company has offered to either extend your health benefits or make any of your COBRA payments. Remember that you can ask your employer to help make these payments for you as part of the severance package. 4. Unemployment Benefits If you are about to lose your job, you are probably very interested in obtaining unemployment benefits. Typically, a person is only entitled to unemployment benefits if they are laid off due to a lack of work. A person who is terminated for cause or quits is not entitled to benefits. It is not uncommon for companies to challenge a former employee’s request for unemployment benefits on the ground that the employee was fired for cause or poor performance. You can make sure this does not happen to you by including the right language in your severance package. Obtain an agreement that your employer will not contest your right to unemployment benefits. In order to do this, add a sentence to your agreement with language similar to this: “It is agreed that [You] had been laid off for lack of work (or restructuring or downsizing etc…) and that [You] is entitled to receive unemployment benefits and X Company agrees that it will not contest any claim for unemployment benefits requested by [You]. 5. Exercise Your Vested Stock Options If you were provided stock options, make sure you have an opportunity to exercise them. Typically a departing employee will have 90 days to exercise vested stock options before they expire. But make sure this is clearly stated in your severance package and you can ask to extend the 90-day period. 6. Accelerate the Vesting Schedule for Unvested Options or Equity Grants Executive compensation often comes in the form of unvested stock or options. For example, a company may offer an executive 300 shares of company stock and the shares will vest over three years. If you have unvested equity or options, you can ask your company accelerate the vesting date so they vest before you leave the company. 7. Convert Outplace Services into Cash Companies often offer outplace services to departing employees. If you don’t feel that the outplacement service will provide a benefit, then ask your company to provide you with the cash value of these services. 8. Vacation Pay Some companies allow an employee’s unused vacation time to accrue over time. Check your company policy manual or ask a human resources representative about this and if your have accrued vacation time, ask to have it paid in cash or ask to stay on the company payroll until the vacation time is used up. 9. Determine Why You Were Let Go You may have leverage to negotiate a much better severance package if your employment was terminated illegally. Your termination may be illegal if you were let go for any of the following reasons: age if you are over 40, gender, race, religion, national origin, sexual orientation, disability or serious illness, sick family members, pregnancy, jury service, or for complaining about sex harassment, employment discrimination or failure to pay overtime. If any of these factors are at play, you may have grounds to substantially increase your severance […]

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Employment Law Blog

Non-Compete Agreements Do Not Apply to New York Workers Fired Without Cause

Fired workers in New York are not bound to non-compete agreements if they were terminated without cause. Non-Compete Agreements Void if Employee is Fired Without Cause Arakelian v. Omnicare Inc. concerned a Vice President of Business Development at a Fortune 500 healthcare company who was terminated after the company was acquired by Omnicare Inc.  As part of her severance agreement, the worker had signed a promise not to compete with the company for a period of two years after her termination and not to solicit former clients or workers for the same period of time. The court in its ruling affirmed the New York rule on non-compete agreements that they will not be enforced if the termination was not for cause. This New York rule is based on the assumption that a non-compete agreement can only be enforced if an employer would be willing to still hire the worker. This willingness to hire creates the “mutuality of agreement” necessary to affirm the restrictions. This New York rule sets the state apart from most other jurisdictions that will only strike down a non-compete or non-solicitation agreement if it is unreasonably expansive in time or scope. In New York, this analysis can only occur after an employee voluntarily quits or is fired for cause and had signed a non-compete or non-solicitation agreement. This rule does not just apply to New York employees, however, due to the nature of many non-compete agreements and non-solicitation provisions. As many non-compete agreements cover multiple states or even entire regions, what this rule means is that these agreements will not apply for competition or solicitation within New York state, regardless of the residency or other status of the competing or soliciting worker. So in this case, a Virginia resident working for a Maryland company who signed the non-compete agreement in Maryland cannot be kept from accepting a competing job in New York if she was fired without cause. This rule not only protects New York workers but is sure to attract such workers to New York who may be restricted from working in other states that do not have this rule. Although not explicitly addressed by the court in its opinion, it seems that a confidentiality agreement signed by an employee may not fall under this rule. The plaintiff did not argue the point so the court did not reach the question and it seems no case has directly addressed the issue. If so, that means that a former employee may still be restricted from using confidential client information in order to compete for or solicit clients, and other actions that could violate the agreement. This issue is sure to come up again in New York court and when it does this question may finally be answered. Until then, in New York, employers are severely limited in their attempts to restrict their former employees’ freedom of employment if they are the ones who led to their termination in the first place. This puts New York at the forefront of states in the nation in its protection of any employee’s right to work.

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Employment Law Blog

Retaliation at Work and How to Recognize it

Fear of retaliation at work prevents many employees from defending themselves against the abusive and illegal actions of their employers.   Many employees would rather put up with discrimination, a hostile work environment, or accept being misclassified as an independent contractor or salaried employee, than risk alienating an employer and possibly even losing their jobs by asserting their rights. A number of factors can make the decision to stand up to illegal employment practices a difficult one, but an employee should never be intimidated against taking action by the fear of retaliation at work. A series of federal, state and local laws exist to protect employees against any adverse action taken against them for engaging in a protected activity, such as filing a lawsuit or charge of discrimination with the EEOC, and the scope of this protection is broader than many realize. It may seem common sense that an employer cannot fire an employee for filing a lawsuit. But many are not aware that the legal protection of employees extends much further. In fact, any good faith complaint of unlawful employment practices, such as harassment, discrimination, failure to provide accommodations for a disability, or failure to provide overtime, is considered protected. This includes internal complaints made directly to an employer or the company’s HR department. Complaining to an external state or federal agency, such as the Department of Labor or the EEOC, is also conduct that is protected from retaliation at work. Retaliation at Work is Not Limited to Termination Perhaps more important than the definition of protected conduct is the definition of retaliation itself. Many employees simply don’t realize that any form of retaliation at work is illegal and actionable—it’s not necessary that an employee lose her job. As the Supreme Court has recently held, if an adverse action is severe enough that it would have “dissuaded a reasonable worker from making or supporting a charge of discrimination,??? that act is sufficient to support a retaliation claim. Pamela Wolf surveyed developments in case law on the issue, and she notes that the standard for retaliation at work is continuing to loosen. For instance, screaming and threats—even without any further adverse action—may be enough to constitute retaliation.  The simple temporal proximity of the adverse action to the protected conduct may be enough to get to trial, which is especially significant, as bad intent can often be very difficult to prove. Finally, the Supreme Court recently found that you can now bring a claim for retaliation even if you are not the person engaged in protected conduct, provided you are associated with that person. In that case, Thompson v. North Am. Stainless,a worker who was fired after his fiancé complained about sexual harassment had a claim for retaliation at work even though he made no complaint himself. Employees too often feel powerless to challenge hostile work environments, harassment, or the failure to pay overtime. Workers understandably fear being cast into a difficult job market, and conclude that the devil they know is better than the devil they don’t. An extensive legal framework exists, however, to protect employees against the very retaliation they might fear, and a deeper understanding of those protections may make employees more comfortable standing up to abusive practices.

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Employment Law Blog

5 Tricks Companies Use to Avoid Paying Overtime to Employees

The overtime pay laws are old and complicated and most people do not understand them. Many companies do their best to NOT explain the laws to their employees.  Here is a list of 5 tricks with examples that companies use to cheat employees out of overtime pay: Trick #1. Working Off The Clock Some people are required to work a strict eight hour schedule and only get paid for those eight hours.  BUT employers often require employees to arrive early to boot up a computer, configure programs or do some other preparation so they are ready to go when their shift starts. This kind of “be ready pre-work” can require anywhere from 10 to 30 minutes (or more) before the shift.  It may also be required at the end of shift as well. Another example of this “off the clock trick” is a customer service rep who is required to take any call that comes in before the shift ends, but stay on the call until the matter is resolved.   This could keep an employee working another 15 or 30 minutes past their shift. These examples of extra time can add up to overtime hours and require payment at the premium time and half rate.   But many of these employees are simply not paid for “working off the clock.” Trick #2. Inside Sales There are two kinds of sales people: (1) Outside sales people and (2) Inside sales people. Outside sales people are road warriors who spend the majority of their time out of the office. Outside sales people are NOT entitled to overtime pay.Inside sales people spend most of their time in the office drumming up business on the phone or online.  These people ARE entitled to overtime pay.  But, companies frequently classify all salespeople as exempt from overtime.  As a result, inside sales people are frequently deprived of overtime pay. Trick #3.  Salary Most people who earn a salary are under the mistaken belief that they are not entitled to overtime pay.   There is no rule that exempts salaried employees from the right to receive overtime pay.  In fact, the law assumes that ALL employees, salaried and hourly alike, are entitled to overtime pay. As a general rule,  high level employees in management and executive positions are not entitled to overtime pay.  But most other middle and lower level employees are entitled to overtime pay even if they are paid a salary.   Unfortunately, many of these employees do not know they are entitled to overtime pay. Trick #4.  Pseudo Job Titles Have you ever met an Assistant Manager who does not manage anyone?  Or how about a Vice President who is not in charge of anything?  Companies often give employees fancy job titles as a way to trick them out of overtime pay.   The fake job title indicates that the person in that position does the kind of work that would exempt them from overtime pay.  Reality is – these job titles are often deceptive because the company just does not want to pay overtime. For example, the Dollar General Store company gave employees pseudo titles such as Store Managers.  But these managers did very little managing and a lot of hard labor like sweeping and stocking shelves etc… A class action was brought on behalf of 1,424 managers and the company had to pay them $35 Million in unpaid overtime pay due to the bogus job titles.  If you have a job title, make sure it accurately describes what you really do.  It could be a trick to make you think that you are not entitled to overtime pay. Trick #5.  Comp Time Some companies have policy of providing “comp time” to employees who work overtime. Under these programs, EMPLOYEES ARE NOT PAID for the extra hours worked.  Instead, employees are given time off in the future.   These comp time plans are illegal because employees MUST be paid for all time worked, including overtime time. What Should You Do if You are Owed Overtime Pay? We strongly advise that you contact The Ottinger Firm for a free consultation.  Call us at 347-492-1904 (NY) or 415-508-7786 (SF) and we will happy to explain your options and help you recover your overtime pay if you have a case.

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Employment Law Blog

How to Fetch a Better Severance Package

Severance Package Negotiation Tips My dog Miller loves to play fetch on the beach.   It struck me that playing fetch has some similarities to a severance package negotiation.   In this video, you can see Miller playing fetch on the beach and I explain how a severance pay negotiation works.  You can read more about severance negotiation tactics below the video. How to Get a Better Severance Package In order to improve your severance package, you need to understand what your company wants from you.  In a severance situation, your company wants you to cooperate and leave quietly.  A severance package is simply an offer to purchase your cooperation.   In most cases, it pays to cooperate and obtain the severance package that is offered.  But if you suspect that your rights have been violated at work, you might be able to negotiate an enhanced package. Don’t Cooperate if You Have a Potential Employment Claim You can negotiate a better severance package if you have a viable employment claim.  If your employer has violated your rights, you can use that to negotiate a better severance package.  We have increased severance pay offers many times over by threatening employment litigation.  But this only works if the claim is viable. Most employment claims today involve some kind of employment discrimination.  If you were fired, demoted or otherwise denied employment benefits due to a disability, pregnancy, your sexual orientation, gender, race, religion or national origin, you might have a claim.  Other common workplace wrongs involve firing an employee for taking or requesting family or medical leave, reporting employment discrimination or sexual harassment or complaining about wage violations such as the denial of overtime pay.  If you suspect any kind of foul play, it pays to contact our New York severance lawyers Get a Free Consultation Many employment law firms today offer free telephone consultations.  At our firm, you can call us and tell us about your situation and we will let you know if we think you have a claim.   There is no charge.   Call us at 212-571-2000 or Contact Us online.

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