Employment Severance Pay
Seperation Agreements
NonCompete
Unemployment Insurance Appeals
At Will Employment
COBRA
This site is about SEVERANCE PAY & SEPARATION AGREEMENTS. Generally, this information isn't as relevant for union members, government employees, minimum wages employees, - sorry. As an attorney practicing on the employee-side, I've received 2,500+ hits to my website/emails inquiring about "severance" and I've managed dozens of client projects negotiating severance pay. It seems even savvy business people have misconceptions about severance pay practices; maybe this site will offer some clarity. However, this is not a substitute for qualified legal counsel. TCW
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The materials and links contained in this site, legal or otherwise, are: general information; a matter of opinion; less relevant for employees outside of California; and/or subject to change. This information cannot serve as legal advice in any particular situation and may well be inaccurate for your situation. Please seek an attorney-client relationship for expert help with your legal matters..
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A Little Closer to Reality:
It's No Gift! Severance pay is a trade for your future good will, the release of all your potential claims (known and unknown), and may impose special contractual obligations with respect to confidentiality and non-disparagement. In the worst examples, liquidated damages and restrictive covenants may be added to the legal language of the release agreement. Think about it, if it's a gift ...why are you signing a complex legal document?
They Pay Severance Most employers will pay severance. Yes, it does depend on your circumstances and your negotiating leverage. But, the fact that you haven't heard about severance packages paid to former employees may simply mean they keep these arrangements quiet. When companies have stated severance policies they might be supplemented if the situation calls for doing something more. Severance is often paid to employees subject to a lay-off, as well as terminated employees, and also to employees who decide to resign. It all depends on the circumstances.
An Offer Rejected is ..., Once a severance offer is made it's dangerous to expressly reject it. In the worst scenario, an offer rejected is dead - meaning there's no severance offer on the table to accept and your employer isn't required to re-offer..
Review, Revocation & Covenants The 21/7 day review and revocation periods are offered so the employer complies with the waiver of rights and claims requirements of the Age Discrimination in Employment Act. In other words, you're given the review and revocation period in exchange for giving up your rights to later claim you were the victim of age discrimination in employment. There are federal and state laws which can over-ride parts of a separation agreements that are legally void and invalid; non-compete clauses and ERISA retirement plan rights might be examples. That said, it's dangerous to allow new restrictive covenants to be added to a simple separation agreement between your (former) employer and you, you may be stuck with a new ball and chain.
Don't Confuse Severance Pay with Unemployment Insurance Generally speaking, severance pay is irrelevant for unemployment insurance benefits. However, salary continuation is a different thing. And, whether you quit or were involuntarily terminated is an important distinction for collecting unemployment insurance benefits. Salary continuation and amounts given you to support you while you're seeking new employment are hot buttons for the EDD and are viewed differenly than lump-sum severance - don't' get these different types of payments confused.
Threatening to Quit Can Be a Good (Though High Risk) Strategy Some of the largest monetary severance and separation packages I've negotiated have been for employees who have disclosed to their employer they intend to quit. Obviously, an employee contemplating this type of negotiation needs to know just what he/she is doing, the risks, and how they intend to negotiate their exit from the employer. This is a often a high risk, high reward scenario.
It's Not Just About Cash Think package, not just cash. Valuable severance packages will contain many non-cash components...which may benefits both parties. How about being able to use your employer's voicemail box for 3 months? Sometimes these small things really matter.
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Recent News About Severance
- Courtesy of Google News
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The Law Offices of
THOMAS C. WALKER
228 Hamilton Avenue, Third Floor
Palo Alto, CA 94301
email: TCWalker@WLG-CA.com
phone: (650) 798-5252
facsimile: (650) 651-1530
toll free: (888) LAW-8866
Thoughts about Severance Practices & Attorney Services
Paying For A Coach / Attorney
I'm unclear how business coaches work, but there are more than a few plaintiff's employment attorneys that will partner with a current employee to negotiate a separation agreement. Many more attorneys will represent a wrongfully terminated employee seeking a negotiated settlement with their former employer.
If an attorney is going to coach you from behind the scenes, that's often referred to as consultative relationship. Often these will be paid for via a flat fee, or hourly fees with a cap. My scan of the costs suggests: up to $1000 for developing a simple strategy, coaching and reviewing proposed documents, escalating to $2000 for more complex scenarios and sophisticated agreements. If the strategy involves perfecting and presenting legal claims, (such as agency filing and service), perhaps more. Of course, as the cost goes up the tendency is to adopt an arrangement which defers current fees by using a contingency arrangement. A hybrid approach would include some start fee with contingency fees paid from the cash component of a severance package. That is my preference.
If there are claims that might only be resolved through litigation, mediation or arbitration then the fee arrangement offered by an attorney is likely to be factored on an entirely different basis.
Common Myths & Misconceptions about Severance:
"Severance pay is a gift."
"My employer doesn't pay severance."
"Since they made an offer of severance I can always counter for more,"
"My employer says they never pay more than one week for each year of service."
"My separation agreement has a 21 day review and 7 day revocation clause; it must be fair."
"The release clause of the separation agreement could jeopardize my COBRA and 401(k) account!"
"I can't collect unemployment because I was paid severance, even though I was terminated by my employer "
"I'm quitting, so I can't ask for severance."
"My company says cash is too tight to pay any severance."
Employee Rights & Severance Information
