Blog about Employment Separation and Severance
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If you been employed this last decade you likely have seen through several human resources myths, like “Employees are our most important assets”, and “Our Code of Conduct requires honesty and professionalism by all members of management”. One that persists is the requirement to give two weeks notice at time of resignation. Really? And, how does that square with an employer’s favorite doctrine of “at will” employment? As a California based employee, here are a few things for you to consider: 1.Notice to management that you intend to leave may cause the employer to terminate your employment immediately. Although they may pay you for those two weeks, they likely don’t have to and many times they won’t. If the employee handbook discusses two weeks notice and gives you the clear impression you employment will continue for those two weeks – you have an argument to get paid. The risk is you are out of two week’s pay you were expecting, and in some companies your benefits will terminate immediately. 2.Those two weeks can be painful. You may find yourself shut-off from internal systems, your company cell phone and voicemail might be blocked. You might be given restrictions on talking to clients/customers, and even your company friends. And, you may not like what they ask you to do during those two weeks. 3.Since you haven’t started working for another company as yet, you can bet there is going to be a good deal of curiosity and questions about where you are going to work and what you will be doing. If you are planning on starting work with a competitor you can bet this will get uncomfortable, and in the worst scenarios you might sense a desire to sabotage your transition. On the other hand, The company may offer special benefits if employees give the requested notice, or there is some program with unaccrued/unvested pay that will vest and be paid to you if give the requisite notice. These are rare, but not unheard of – check it out. Perhaps you have the opportunity to negotiate the rules of engagement and benefits of staying those two weeks. And, perhaps you are betting on a positive afterglow, favorable reference letters and other reputation considerations is making the decision to give advance notice. Maybe you are giving notice because you simply believe it’s the right thing to do. The point of this post is that two weeks notice is something for you might elect to do for tangible and intangible reasons, understanding the risks you are taking. It is not a valid employment doctrine.
Two Weeks Notice & HR Myths (2016)
This Blog is not legal advice; this website and all comments are all general interwebz information for California employees. For legal advice, consult your lawyer or hire me! No interaction with this website creates an attorney-client relationship or privilege. Copyright Thomas C. Walker, Esq. © 2015-6. All rights reserved.
When US government agencies and the National Labor Relations Board attack what has been fairly standard language in severance and release agreements it’s worth noting. Promises are Promises; but there as some promises that should never be asked for at the end of an employer-employee relationship. Although these prohibitions have yet to be written into statutory law, or sufficiently tested in the courts, it’s in the wind; here are some examples of the direction this wind is blowing:
Confidentiality: Demanding absolute confidentiality deprives former employees of their rights to complain to government agencies and collaborate with other employees to uncover unlawful wage and unfair labor practices;
Non-Disparagement: Former employees who are required to promise non-disparagement may be denied their rights to complain to federal and state agencies with respect to unlawful employment practices;
Non-Solicitation: In states that prohibit non-compete agreement (like California), non-solicitation of employees (anti-raiding) clauses my infringe upon employee mobility, which violates public policy considerations. Further, the NRLA may find fault with general non-solicitation clauses as interfering with and employee’s rights to engage in protected concerted activity.
An Overbroad Separation & Release Agreement: The EEOC is concerned about these over-drafted, 8-15 page, separation agreements that need a legal team to decipher. Specifically, the EEOC announced it would attack restrictive covenants and releases that don’t carve out exceptions to the former employee to participate in EEOC filings and investigations post-employment.
The National Labor Relations Board and National Labor Relations Act it enforces are not just protection for union employee, it protects a much broader workforce, much like the EEOC; covering almost all private, non-agricultural, employee-workers. It will be a dramatic change in employer practices if these entities take an active rule in defined what are permissible promises an employer is allowed to demand as part of the final agreement.
Attacks on Restrictive Covenants in Severance Agreements (2016)
Benchmarking Severance [proceed with caution] (2016)
Industry practice surveys can be dangerous as bench-marking and strategy assessment tools. They are by nature rear view mirror looking, exclusive to the target market of the surveying consulting firm, and present a rather narrow view of broad industry practices and trends. They should not be read as realistic guidelines for your severance deal, (and that’s not their purposes). Nonetheless, these excellent organizations have offered these survey summaries, and knowledge is power. Everyone likes to make comparisons. Again, these tend to be larger employers who were invited to participate by top tier organizations in year’s past. It is unlikely that your employer, or an employer like yours, was surveyed: AON / Radford 2014 Severance Survey Risemart 2014 Severance Guide & Survey World at Work 2014 Severance Survey
Job or Career? Does it Matter? (2015)
In my working experience ‘careers’ were noted by their linear progression: there was a beginning, middle and end. You progressed as a naive learner to accomplished performer to becoming a senior authority and/or key resource. Jobs on the other hand a had a static quality, you are essentially the same resource to the employer on day 5000 as you were on day 1. (Interesting comparison here.) Now, older, more jaded perhaps, this distinction falls away for me. Employers are often so big, the availability of talent so apparently plentiful and corporate needs so ephemeral that the modern career sure seems more commoditized and job-like than career-like. The linear progression appears illusionary, or temporary. The organization is flattened, distinctions are functional. When these career qualities matter and need to be spoken boldly is in the context of negotiating with an employer; at the beginning, middle and end of a career. Loyalty, security, experience, duration, talent, meaning, knowledge-work, commitment, ambition…all of these qualities were and are part of the value package and represent leverage an employee brings to the table in trade for the rights, compensation, benefits and privileges of a particular employment relationship..or a release from one’s history. However, it’s also worth remembering that these qualities are not recognized under our laws as transmuting a career employment relationship into anything more than a mere JOB. Unless there is a clear contractual promise between the employer and employer that a career means something more than “at will” employment, the career employee is assumed to have the job security of a minimum wage worker. This is a rude awakening to many “career” professionals. Crazy bosses, mobbing subordinates, sly politics and favoritism, false evaluations and general dirty pool and improper motives are not workable legal claims for a wrongful termination scenario unless the facts offer something in a vein of a civil rights animus. Don’t be fooled otherwise. As our California Supreme Court announced at the end of the last century in Guz *, so absolutely; ‘[T]he courts have not deemed it to be their function, in the absence of contractual, statutory or public policy considerations, to compel a person to accept or retain another in his employ, nor to compel any person against his will to remain in the employ of another. Indeed, they have consistently held that in such a confidential relationship, the privilege [to terminate] is absolute, and the presence of ill will or improper motive will not destroy it.’ (9 Williston on Contracts [(3d ed. 1957)] § 1017, p. 134.)” [emphasis added]. Perhaps Caroline Talbot, transition coach, says it best: ” A career is a way of earning a living, which of itself gives personal satisfaction and is part of a satisfying and enjoyable life.”.
*Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317 , 100 Cal.Rptr.2d 352; 8 P.3d 1089, FN. 8
I am not recommending a Do It Yourself approach to exit packages and severance negotiations, but I am hardly suggesting that the reader isn’t smart and savvy enough to represent themselves adequately, perhaps superbly. But, even the best negotiator may suffer from a lack of direct experience in this unique event, (and a third party perspective as an exiting employee), jumping into their own severance negotiations. If you are going to negotiate for your exit and your package, here is a discussion of what I think are the most common negotiating dysfunctions current & former employees suffer in getting their desired deal from their employer: 1. Demanding Immediacy: Pushing for too much too soon is a huge mistake. Some try to do it in the exit interview or the day of their separation. And, they demand immediate answers. Well, they often get one and the answer is no. This is a process; anything done quickly, without pre-thought or preparation, invites the quick answer. 2. Verbal Negotiation: This informal mode of communicating your negotiating position invites thoughtless responses, and ones that are off the record. If you do achieve progress there is no record of promises made. It often results in disappointing outcomes after you think you had the deal made. 3. Polarizing Anger: Passion is positive, and so is emotion. But if it spills into a dialogue filled with anger the parties are more likely to engage in fight or flight behaviors. Game over. 4. Collateral Issues: Sure, there is a lot you could talk about, but to the extent your arguments and justification stray from matter at hand so will the response. The fact that there have been a variety of bad behaviors you’ve witnessed during your employment relationship does not normally justify what you are asking for now. 5. Out Of Bounds: Asking for too much, or something employers just don’t give, undermines your credibility and causes the company to simply walk away. You need to be credible and your proposals need to have business practicality. 6. Revenge & Justice: Expecting to change people, the company, or who’s allowed to stay in charge, is a waste of your energy and runs into the problems discussed above. 7. Litigating Your History: You are not trying to win an argument, you are working toward a negotiated resolution. They are never going to agree to your version of past events, keep the focus on present and future. 8. Legal Threats: Threatening legal action will move your negotiating forum to legal counsel’s office, and that will likely be the end of any effort to arrive at a good faith business resolution. 9. Tunnel Vision: Severance pay might be the light at the end of the tunnel, but your package has a dozen other features – some of which have serious monetary or reputation value. You are trying to negotiate a package with several moving parts, not one benefit. 10. “God is in the details”: As the architect pointed out, things might look good from afar, but you need to be rigorous and detailed oriented in reviewing all the components. There is a reason these separation and release agreements are 4, 8, 15 pages. What are they promising, and what aren’t they promising, and how will it affect your behaviors and afterglow in the future? Final thought: Don’t start proposing your ideas too soon and while mentally and/or emotionally unbalanced. It is my experience that there is good reason to pull back and clear yourself of the debris of the employment relationship. You have to go through the change in your identity from disaffected employee to advocate for the favorable business resolution. Your state of mind and emotional balance will influence everything.
Employment Exits & Severance - Top Ten Negotiating Blunders (2016)
The BATNA of Severance Negotiation (2016)
The Best Alternative to a Negotiated Agreement in the context of severance negotiations has a speculative value for both parties, and this fact presents an opportunity for leveraging and interest positioning.
For the employer, a failed severance negotiation means not paying money & other benefits; but it also means not acquiring the (former) employees promises and releases, or perhaps not acquiring a resignation decision by a problem employee. But, employers value predictability and control, and a walk-away BATNA provides neither. They’ll have to wait for the next shoe to drop and suffer some disorganization from an abrupt departure.
The walk-away BATNA for the employee is freedom to file a lawsuit, make an agency complaint, engage in lawful disparagement in social media, perhaps influence future business that might come to that employer. If still employed, it may be an opportunity to ride it out as a disaffected employee while searching for other opportunities. But, employees value new economic rewards, and a walk-away BATNA promises no immediate pay-off. Revenge does not buy groceries, and it has a habit of blowing back.
If the employer is informed of what their walk-away BATNA looks like in comparison to the upside of a mutual agreement delivering predictability, control and continuity at time of separation, the employee gains valuable leverage. If the proposal addresses these underlying concerns and interests of the employer, then this leverage pays off.
Non Compete Game Changer – Cal. Labor Code Section 925, SB 1241(2016)
One dirty little secret of Silicon Valley companies is the hiring of leased employees, contract employees, subject to non-competes / non-employment restrictions by their primary “vendor” employers. These are inserted in leasing organization / tech vendor employment contracts. These contract employees are prohibited from quitting to join certain named employers, and these restrictions often last for a year or more after their termination of employment from the vendor.
How can this be possible, California abhors non-compete type restrictions, right? It is possible because clever out-of-state headquartered employers and attorneys have drafted employment contracts subjecting employees to legal venue and forums outside of California. In other words, violate the agreement, find yourself served with a lawsuit for breach of contract filed in Texas, New Jersey, etc.
But you can legally declare these contracts to be void in California, right? In the last few years you were likely to get the legal advice to get out your checkbook and hunker down for a protracted legal battle.
Thanks to SB 1241, signed into law as Labor Code Section 925 by Governor Brown a few Sundays ago, these forum shifting clauses are voidable for contracts entered into, modified, or extended on or after January 1, 2017. In the new year, California law will prevents enforcement of new out-of-state non-competes and clauses that require the employee be subject to the courts or arbitration of non-California forums. The will be genuine relief for many burden by these oppressive contracts.
Great news, but note: There are fine points, exceptions and ambiguities in this brand new law. Be sure to run your scenario past a competent legal professional before committing to a course of action.