Terminations can be an emotionally draining process for both an employee. Many employers will provide the employee with a severance agreement. The language and terms of this agreement may be confusing to an employee. One of the best ways to combat the stress and confusion of a severance agreement is to consult with an employment attorney. Your attorney can explain the terms and what you are agreeing to in exchange for the severance amount. Here are some of the key aspects of a severance agreement to keep in mind:
Knowing the Details of the Severance Agreement
Some employees blindly sign a severance agreement without knowing what the agreement contains. If they do this, they could be binding themselves to terms that are strongly to the employer’s advantage. Employees should understand the compensation they are receiving, when they are receiving it, and what they are agreeing to in exchange for this compensation. The employee is likely giving up some significant legal rights in order to receive this compensation. Frequently, a severance agreement will require an Arizona employee to forego the right to sue their employer and it may contain a non-compete agreement.
It is beneficial to know the exact details of the severance agreement. For example, if you are being terminated and have a strong workplace discrimination claim against the employer, you may want to discuss this potential claim with an employment attorney before signing any document as you may be barred from pursuing a discrimination claim if you sign the agreement.
The Legal Status of Severance Agreements
It is important to note that offering a terminated employee severance is not legally required in the state of Arizona. When an Arizona employer offers severance, employees should consider why the employer is offering the agreement and if it is being offered to other employees. Some of the reasons an employer may wish to offer a severance agreement includes:
- Creating a company culture that rewards tenure and hard work
- Avoiding litigation
- Protecting company information and/or preventing employees from working for competitors
Whatever the reasons might be for an employer to offer severance, the agreement becomes a legal contract once an employee agree to the severance terms. Both parties are legally bound to honor the terms of the agreement. If an employment handbook or contract defines the terms of severance, Arizona courts may view such language as an enforceable promise should an employer try to avoid payment.
Review a Severance Agreement with an Attorney
As mentioned, one reason an employer offers severance agreements is to limit lawsuits. If you have a legitimate complaint or legal action against an employer, do not sign a severance agreement without consulting with an employment attorney. If you believe your termination was illegal, an employment attorney can discuss the facts and circumstances surrounding the termination in order to determine if you have a possible legal claim. Make sure to bring the agreement with you as well as relevant documentation to determine the best path forward. Always explore whether your termination fits one of the following:
- Discriminatory termination based on race, gender, disability, age, religion or national origin
- Termination that violates Arizona or federal laws
- Retaliatory termination based on workers’ compensation claim, sexual harassment claim or whistleblower claims
If you believe you were terminated for an illegal reason, seek the help of an experienced Arizona employment lawyer immediately.
Look Carefully at the Severance Package
When you are given a severance offer, you will have a limited amount of time to decide whether or not to accept the offer, as outlined by the severance agreement itself. Take this time to talk to your attorney and carefully review what the package offers. The following aspects of severance can be negotiated for increased pay or better benefits:
- The amount of severance pay
- Payment for accrued time off
- Negotiating for the health, life and disability insurance you need
- Unemployment benefits
- The method of payment (lump-sum vs. periodic payments)
- Non-compete and Non-Solicitation Agreements
- Neutral reference provision
- Non-defamation clause
As always, an Arizona employment law attorney will help you analyze the severance package to negotiate and make counter-offers that provide you with a favorable severance agreement. The lawyers here at Tyler Allen Law Firm are here to help. Give us a call at (602) 456-0545.