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New York Severance Lawyers: How to Evaluate and Negotiate an Agreement
A severance package is a legal contract between you and your employer. They offer you benefits — payment, health insurance, references — in exchange for a smooth exit from the company and the promise that you won’t take certain actions against them.
Some severance packages are fair and balanced and do not need substantial modification. Others can and should be re-negotiated.
There’s no formula for calculating whether the benefits offered in your employer’s severance package are fair. It’s important to closely review and evaluate the terms of your company’s offer.
We’ll run through some key things to look for in the agreement when you’re considering whether to negotiate.
Then, we’ll provide tips on how to negotiate and point you toward resources that can help you get the best possible severance package.
8 Key Points to Consider When Reviewing A Severance Agreement
What is the Severance Pay Schedule?
Many companies will propose a payout in 30 or 45 days after execution of the severance agreement. There is no reason to wait that long, and companies will often shorten the payout date to 10 or 15 days upon request.
Also, companies often propose a payout over time that basically keeps you on the payroll for a period of time. A lump sum payment is preferable because you get all the money immediately.
Payouts over time can be disrupted if something comes up — avoid these potential issues with an early lump sum payment.
Are Outplacement Services Offered?
If so, determine if you need them. Outplacement programs offer support for departing employees in their new job search.
They can include services like resume reviews, career counseling, and interview coaching. Many professionals today decline these services. If you don’t want them, ask your employer for the cash equivalent instead.
Are the Severance Payments Subject to a Mitigation Offset?
Essentially, if you get a new job within a certain time frame, are you required to pay back some of your severance payments or have the amount reduced?
This is something you’ll want to avoid if you can. If an offset clause is included in your agreement, ask to have it removed.
Companies usually agree to this. Since the point of a severance package is to end your relationship with your employer, they’re often willing to make a compromise to avoid prolonging your ties.
Here is a clause that our New York severance lawyers use to ensure you’re not subject to mitigation and offsets:
“The Executive is under no obligation to seek other employment, and there shall be no offset against any amounts due to him on account of any remuneration or benefits provided by any subsequent employment he may obtain.”
Is There Any Money Owed to You That is Independent of the Severance Package?
For example, are you owed any expense reimbursements or a pending bonus? These payments should be recognized in the agreement.
If you know that certain expenses are due, put them in writing, and show the documentation to your employer immediately. This way, the amount owed is known, and if any questions arise, you can try to solve them immediately.
Here is a clause that covers outstanding business expenses you want to be reimbursed:
“Within 15 days of the Separation Date, the Company shall pay to the Executive any expense reimbursements due to the Executive as of the Separation Date pursuant to the applicable plan, program or practice of the Company.”
If an accrued bonus is due, try to get the bonus paid. Companies will sometimes try to avoid paying out bonuses in the severance package. But be aware, the bonus won’t be included in severance if it has already been earned.
Do They Offer Benefits Continuation?
If the company has offered to continue your health insurance, will this be accomplished by continuing the existing insurance plan or by COBRA reimbursement? This should be set forth clearly in the agreement.
If the company has not offered to extend benefits, you should ask them to do so. Ask to have the benefit continuation mirror the severance period. For instance, if the severance offer is four months, ask for four months of continuing health insurance.
Will You Receive a Job Reference?
What type of reference will the company provide to you? If they will agree to a letter of reference, have the letter prepared and attach it to the agreement.
If a letter cannot or will not be prepared, set out the terms of the reference in the agreement, using language like the following:
“The Company agrees to supply a neutral reference letter that includes the Executive’s title, dates of employment, salary and the reason for separation as resignation.”
Note that many companies today are reluctant to provide anything more than a neutral job reference for exiting employees.
What Potential Claims do You Have to Waive?
It’s normal for a severance agreement to require workers to waive the right to bring some legal claims against an employer.
For instance, a company might include a non-disparagement clause that prohibits you from making negative statements about your former employer to reporters or on social media.
You can also legally waive your claims under the Age Discrimination in Employment Act (ADEA) in a severance agreement.
But in order for the ADEA waiver to be valid, the employer must be sure these seven factors are met:
- The severance agreement must reference the ADEA by its full name.
- The employee must be provided at least 21 days to sign the severance agreement.
- After signing the agreement, the employee must be provided at least 7 days to change his or her mind.
- The employee must be advised to consult an attorney before signing the agreement.
- If the employee was terminated as part of a group, he or she must be given written notice.
- Employees terminated as part of a group have at least 45 days to consider signing the agreement.
- Employees terminated as part of a group have a right to see a written list of the group of workers from which the employer chose the workers to be laid off. The list must state who was laid off, who was not, and the age and title of every employee in the group.
However, there are certain legal claims you can’t waive in a severance agreement. For example, you can’t waive your right to file claims with the Equal Employment Opportunity Commission (EEOC) for any discrimination you’ve faced at work.
And, if you agree to a non-disparagement clause, there must be language in the agreement that allows you to give truthful information to the EEOC, including to testify about your employer if you’re subpoenaed.
Be aware: your boss can try to get you to waive your right to recover money from any EEOC claims, though.
You also cannot waive your right to making claims under the Fair Labor Standards Act (FLSA). But your employer can make you sign a statement acknowledging that you have been properly paid.
Are Integration and Severability Clauses Included?
A severance agreement should contain an integration clause. This clause states that the severance agreement is the one true agreement — that there are no other agreements, whether oral or written. However, the integration clause may include a carve-out for important side agreements, such as an agreement about the employee’s pension.
A severance agreement should also contain a severability clause. A severability clause states that if one portion of the severance agreement is deemed to be invalid, the rest of the agreement still stands.
10 Things to Negotiate for a Better Severance Package
Severance agreements are negotiable, and you can always treat the package in front of you as just an offer — one that you don’t have to accept as is.
Here are the top ten things that we suggest employees do when negotiating severance packages. In the video below, we’ll explain some of the insights behind these tips and severance package negotiation strategy.
- Delay separation date
- Negotiate payment terms
- Collect unpaid expenses
- Ask for more money
- Extend health benefits
- Avoid obligations to pay back employer
- Avoid obligations to seek new employment
- Ask for no contest to unemployment claims
- Ask for a job reference
- Eliminate non-compete clause
Contact a New York Severance Lawyer Today
Negotiating a severance package alone can be difficult. To be sure you’re getting the most of your benefits and not saddling yourself with unexpected restrictions, consult with an employment attorney before negotiating or signing your employer’s severance offer.
Our firm, Ottinger Employment Lawyers, has been helping executives with severance packages since 1999. We will review your severance package and then meet with you over the phone to go over it.
We point out any issues and suggest modifications. In most cases, that is all you need. But if major changes are necessary, we go further and negotiate the modifications.
If you live or work in California or New York and are thinking about negotiating a severance agreement, you should speak to one of the experienced severance lawyers at Ottinger Employment Lawyers.
The first step in the consultation process is a review and evaluation. Send us your severance agreement and we’ll assess the terms and benefits your employer is offering.
Then, we’ll meet with you — on the phone or in person — and go over the agreement with you. We explain the agreement, answer your questions, make suggestions, and determine if it’s possible to negotiate better terms for your severance package.
If we determine that better terms can be negotiated, you can hire us to negotiate on your behalf. We then contact the appropriate representative at your company (usually in-house or outside counsel) and negotiate new terms. We charge a flat fee to negotiate.
Some cases take a few hours to conclude, others take more time. We can’t guarantee results — but in most cases, the increase in value that we obtain greatly exceeds the $750 legal fee that we charge.
Reach out to Ottinger Employment Lawyers to seek help with your severance agreement. Schedule your consultation today by contacting us online or calling (347) 391-8331 to reach our New York employment lawyers.
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