Questions about Executive Compensation and Severance
Executive Compensation Attorneys & Questions About Severance
Employment lawyers at Leeds Brown, representing clients on Long Island and in New York City, encounter employees in need of various work-related services. Many come to us with questions about what happens when it becomes time to leave a job. Executives, managers, and other professionals seek advice about what happens after their employers terminate their positions, subject them to layoffs or they want to resign.
We often receive inquiries about severance. Severance is money paid to an employee when he or she leaves a job. Its terms can be agreed to before employment as part of a contract, or an employer may provide it in the context of an exit strategy for a terminated employee. Many people ask what is the purpose of severance and is it wise to sign a separation agreement. What if an employment contract includes severance provisions and your employer won’t pay?
Our attorneys have reviewed many executive compensation and severance agreements including their financial terms and waivers. We have negotiated with employers for changes, filed breach of contract actions to enforce their provisions and handled discrimination cases arising from them.
Severance packages differ from one another and require particular scrutiny to ensure that you receive maximum value and legal protection. However, there are some elements common to most separations. If you have additional questions or would like professional, dedicated lawyers to review your severance agreement, contact the executive compensation attorneys at Leeds Brown at 1-800-585-4658.
Is there a law that requires an employer to provide severance?
No. There is no federal or New York State law requiring an employer to pay severance.
Is there anything that requires an employer to provide severance?
A written policy: If an employer has a written severance policy, it must pay severance to any eligible employee according to the terms of the policy. The Terms and eligibility are subject to change at the whim of the employer. Ask to see the policy from time to time so you know if you are covered and under what circumstances. Occasionally, an employer has what appears to be an unwritten policy or a history of paying severance which, with evidence of consistency, may be enforceable.
A contract: If you have an agreement that provides for severance, the employer is obligated to pay severance according to its terms. For example, if you have an employment contract or union contract that promises severance, you have the right to enforce the agreement.
How much severance can I get?
Since there is no legal right to severance, the amount varies according to the terms of an employer’s policy or the terms of an individual contract. A policy or contract may set a specific amount your employer will give you if they terminate your employment without cause. Another may calculate severance by multiplying a dollar amount with the number of years you worked for the business. Still, another may contain varying amounts, taking into consideration the circumstances surrounding your departure.
Severance agreements may contain non-monetary benefits as well. Some provide extensions of medical benefits, career coaching opportunities, and life insurance.
Is it lawful to require an employee to waive the right to sue as part of a severance agreement?
Yes. Nearly all severance agreements contain a waiver of some right. Most severance agreements require the employee to waive the rights to all legal claims against the employer as a condition of accepting the severance. Waivers of legal claims routinely specify those that stem from sexual harassment, discrimination, retaliation and wrongful termination.
Many severance agreements also include non-disparagement clauses where you agree not to speak poorly of the company. Non-compete clauses are standard as well.
Can an employee request “a better package?”
There are risks associated with asking for a better package that you should understand before making a “counteroffer” to your employer. Speaking with an attorney is the best way to ensure that you don’t unintentionally lose your severance.
Negotiating better terms of severance is best done by employment law professionals, like the ones at Leeds Brown. If you do have legal claims against your employer, we can help you determine what they are actually worth before you make a decision about giving them up. An analysis of your claims may reveal that it would be more lucrative to pursue them. Alternatively, your waiver may be worth much more than initially suspected.
Can an employer require an employee to sign a severance agreement immediately?
Different companies allow different periods of time for employees to sign and revoke separation contracts. You should ask if you can take it home and review the terms of your severance package before signing anything.
If you are over 40, the Older Workers Benefits Protection Act (OWBPA) requires your employer to give you at least 21 days to consider the agreement. If you do sign it, you then have seven days to revoke your signature.
What if an employer won’t pay according to the terms of a contract, agreement or policy?
Legal counsel is available to help determine if you have a valid contract that is enforceable against your employer. We can negotiate a settlement or file an action to recover the severance money or other benefits to which you are entitled.
Once we examine the terms of your agreement and your employment history, we may uncover other unlawful actions by your employer that would allow you to collect significant monetary damages. You may have a claim for discrimination or wrongful termination.
Employment lawyers at Leeds Brown can help you determine if signing a severance package is a good idea. If you have legal claims against your employer, you should understand what they are worth before you waive your rights. You may wish to explore available options.
Our firm has happily devoted decades to protecting the rights of employees in the New York metropolitan area. Contact our office before you sign your employment contract or severance agreement. You deserve to have counsel on your side making sure that you are receiving the proper compensation and severance to which you’re entitled.
Someone is in our office to take your call 24/7 so don’t wait. Protect your legal rights and call Leeds Brown at 1-800-585-4658.