Employees who are offered severance agreements often wonder if they should sign the agreement, if there is room for negotiation, and whether it is worthwhile to have an attorney review the agreement.
These questions are entirely reasonable as severance agreements are often filled with complicated legal issues that can be challenging to understand and properly navigate. To be sure, severance agreements deal with much more than a final monetary payment between an employee and his or her employer.
Release of Claims
Each employee’s situation is different but almost all severance agreements include a full release of claims. This release will usually cover all claims regardless of whether the employee even knows a potential claim exists. It is important to speak with an attorney to understand the legal rights at stake, explore all potential legal claims, and determine whether it makes sense to release legal claims in exchange for the severance being offered.
Non-disparagement and Confidentiality
Severance agreements usually contain non-disparagement and confidentiality clauses. These clauses forbid employees from disparaging the employer or divulging the terms of the agreement. Employees need to consider whether the language is acceptable and accounts for their individual circumstances.
Sometimes severance agreements include terms that restrict an employee from competing with his or her former employer, otherwise known as a non-competition agreement. Though frowned upon by Minnesota courts, non-competition agreements are enforceable in this state as long as they are reasonable. Because these agreements can have a very real impact on an employee’s ability to secure gainful employment, it is prudent to consult an attorney about any non-competition terms that are included in a severance agreement. In many cases, attorneys can work to negotiate limits on the non-competition agreement.
Finally, employers often impose a timeframe for the employee to consider the agreement and a deadline for executing the document. It is extremely important that employees who have been offered a severance agreement consult with an attorney before signing the agreement. An experienced employment attorney can help to advance the best interest of the employee while also protecting their rights.
Our firm is dedicated to representing employees in all aspects of the employment relationship, including review of severance agreements. If you would like additional information about your options, please contact us.