5 Additional Considerations for Employees Who Received a Severance Agreement

A few months ago, we published an article discussing some key considerations for employees in Maryland who have received settlement agreements from their employers. In that article, we covered compensation and benefits, the stated reason for your termination, confidentiality and other restrictions, and whether you should consider taking legal action instead of signing. Here, Maryland employment attorney Jay Stafford discusses five additional considerations for employees who have been asked to sign a severance agreement as part of their termination.

Important Considerations Before Signing a Severance Agreement in Maryland

The federal government’s budget-cutting efforts are continuing to have ripple effects across the private sector. This is especially true in healthcare, consulting, and other industries that rely heavily on government contracts and grants to maintain their staffing levels. These are also industries in which employers frequently offer severance agreements when conducting layoffs.

While a severance agreement may seem like (and may be presented as) a financial lifeline to give you the time you need to find another job, there are a variety of potential issues that require careful consideration. For example, along with the considerations we discussed previously, it will also be important to consider potential issues such as:

1. Health Insurance Coverage

We touched on this in our previous article, but it is an important topic, so it is worth discussing a bit more on its own. Many employees assume that if they lose their job, they will be able to rely on COBRA to maintain their health insurance coverage post-termination. While this is true, keeping your health insurance coverage under COBRA can be very expensive—potentially thousands of dollars per month. If your future employment prospects are uncertain, this may or may not be a viable option.

With this in mind, it may be worthwhile to address your health insurance coverage needs when negotiating your severance agreement with your employer. You could either do this directly (i.e., by seeking to have your employer continue paying for your health insurance for a specified period of time) or indirectly (i.e., by seeking a larger lump-sum severance payout).

2. Job References

Having a favorable job reference can play a crucial role in securing your next position. With this in mind, in addition to ensuring that your severance agreement states a neutral reason for your termination (as we previously discussed), you may also want to address job references specifically. There are several options, one of which is to request that your employer provide a written job reference at the time of your termination.

3. Intellectual Property (IP) Rights

If you were responsible for developing any intellectual property (IP) during your employment, you may want to address IP rights when negotiating your severance agreement as well. While employers typically seek to retain the rights to any IP their employees develop within the scope of their employment, there are exceptions, and special circumstances (such as developing IP on one’s own time or initiative) may require additional consideration.

4. Starting Your Own Business

If you are planning to start your own business instead of looking for a different job (or if this is an option you are considering), this will require special consideration when negotiating your severance agreement as well. To ensure that you are not unduly restricted from leveraging your experience, your knowledge, or your network, this is a possibility that you will want to discuss specifically with your Maryland employment attorney.

5. Dispute Resolution

Finally, while the dispute resolution provisions (and other “boilerplate” terms) in your severance agreement may not be particularly interesting, they can be extremely important. Before you sign, it will be essential to make sure that you are not unnecessarily waiving your rights, taking on unnecessary risks, or limiting your ability to protect your rights if necessary. An experienced Maryland employment attorney can help here as well—both in terms of advising you regarding what is (and isn’t) reasonable and negotiating with your employer on your behalf as necessary.

Discuss Your Severance Agreement with a Maryland Employment Attorney  

If you have received a severance agreement from your employer, we strongly encourage you to contact us before signing. Signing your severance agreement as-is could have long-term implications, potentially leaving you facing unnecessary financial challenges, limitations, and risks. To discuss your severance agreement with Maryland employment attorney Jay Stafford and his team in confidence, give us a call at 410-514-6099 or tell us how we can reach you online today.