Maryland Severance Agreement Attorney Offers Negotiation Tips

June 29, 2018
The Law Firm of J.W. Stafford

When any employee is leaving a company that is closing its doors or if an employee has been laid off from any organization, there is a good chance that the employee will be offered a severance agreement. Severance agreements can both benefit employers and can benefit employees, which is why it is so common to create these types of contracts upon the departure of a worker.

A severance agreement sets forth the terms of any benefits that a departing employee may be eligible for on the basis of his or her service. Some common benefits that an employee might negotiate for in a severance agreement can include things such as continuing his or her health insurance coverage, an employer paying additional compensation, and more.

However, if an employee wants to get the maximum possible benefits from a severance agreement, it is up to that employee to effectively negotiate the terms of the agreement with his or her employer. Likewise, if companies want the benefits of a severance agreement, including protection from litigation, negotiating an effective and enforceable agreement is essential.

The stakes can be very high for employees and for employers when it comes to negotiating a severance agreement. There may be a lot of money at stake and employees may depend upon receiving the benefits that a severance agreement can provide — especially if the employee is leaving involuntarily and does not yet have another position lined up or if a company is worried about actions that an employee will take after leaving.

Because the terms of a severance agreement can dictate what happens financially and legally after a worker leaves a job, employees and employers should work with a Maryland severance agreement attorney to get help ensuring that their interests are fully protected.  Call an attorney as soon as possible to learn how a lawyer can help you or help your organization.

Tips for Negotiating a Severance Agreement

Employees and employers have different goals when negotiating a severance agreement. However, there are some common tips applicable to both parties in the process of negotiating a severance agreement.

First and foremost, it is essential to remain professional. While an employee may be upset about the loss of a job or an employer may be frustrated with what the company sees as unreasonable demands, it helps no one to allow the negotiation to devolve into an airing of grievances or an unproductive fight. It is essential for employers to protect their brand reputation during the negotiation process, and equally vital for a departing worker to avoid making a bad impression.

When leaving a job, an employee may need the company to serve as a reference later or may end up in a situation where he or she encounters a former boss or co-workers. Burning bridges is a bad idea, particularly when an employee is leaving an organization but intends to find another job in the same career field, so negotiations should take place without either party becoming acrimonious if it is at all possible for this to occur.

Employees who are departing may wish to ask questions in order to find out why they are being terminated and can ask for feedback about their job performance in order to help them to address any issues that are holding back their careers. However, employers must be cautious in the ways in which they answer questions lest they put the company at risk of a wrongful termination claim – so employees often face difficulty getting a straight answer on the reason they were laid off or let go.

Both employers and employees should be aware of the key issues that need to be negotiated in a severance agreement so that these issues can be discussed in detail and so each of the parties involved in the negotiations will know the types of benefits being negotiated. Some of the different issues to negotiate include:

  • Severance pay: This could include a lump sum payment made to an employee who is departing the company or it could include several payments made over time.
  • Unused time off: If an employee has accrued sick days, paid vacation days or holidays that the employee has not utilized, these are often factored into severance pay.
  • Unemployment benefits: Some, but not all, severance agreements request that employees waive the right to make a claim for unemployment benefits.
  • Health insurance benefits: COBRA requires most employees be provided with continued access to group health insurance coverage. However, employers are not required to continue to make any contributions to premiums, which can make affording coverage unaffordable, even if employees are entitled to continue to acquire their coverage through an employer for months after termination. In some severance agreements, employers agree to continue to help pay premiums for a designated time.
  • Other types of insurance coverage: In some severance agreements, employees may also continue to access other types of insurance coverage. This could include disability insurance, vision insurance, dental insurance, life insurance, or health insurance.
  • Non-disclosure clauses: Employees may be prohibited from being able to disclose certain information, such as disclosing why they were fired or offering information to new employers about their work at their existing company.
  • Non-compete agreements: Some severance agreements contain limitations on the types of work an employee can do after leaving an organization. For example, employees may need to agree not to go to work for a direct competitor for several months or even several years. Not all non-competition agreements are enforceable and, in fact, it is common for courts to refuse to honor these agreements, especially if they are overly broad.
  • Clauses barring litigation: Employees may be required, as a condition of receiving severance pay and other benefits, to agree they will not sue their employer for discrimination, wrongful termination, or other potential legal violations during the time the worker was employed or in connection with the employee’s departure. Employees who believe that they may have a valid cause of action against an employer for violating Title VII of the Civil Rights Act, the Americans With Disabilities Act, the Age Discrimination in Employment Act, or any other civil rights laws or worker protection laws should carefully consider whether they are willing to give up the right to pursue a claim for a legal remedy for these violations.

Employees and employers can use an employee handbook or employment contract signed by an employee to provide guidance as to some of the provisions of a severance agreement, if the employee handbook or initial employment contract addressed the issue of severance agreements. If there are no other controlling documents that impact the rules and requirements for severance, then the parties will need to begin from scratch in negotiating an agreement that is amenable.

Employers often have a standard set of policies that govern the types of severance packages that they are willing to offer to employees.  However, workers who are leaving an organization do not necessarily need to agree to the terms that an employer has set forth. Workers can negotiate to have favorable terms including:

  • Continued access to equipment: Employees may try to negotiate to keep valuable items provided by an employer, such as a work computer or phone.
  • Employers providing a larger amount of severance pay: Workers could try to get their employer to agree to continue paying their salary for a designated time period or could try to convince an employer to provide a more substantial lump sum payment.
  • Assistance finding new work: Employees can negotiate for job training, for placement services to help them find a new job, or for a favorable recommendation to be written by the employer.

The negotiation of a severance agreement is not something that employees or employers should typically try to handle on their own. It is important that you or your organization are represented by a Maryland severance agreement attorney who is a skilled negotiator, who is a trusted professional with knowledge of the law, and who can help you to maximize the chances that you will get an agreement that provides you with the maximum of benefits or legal protections.

By working with an attorney to help you craft an agreement, or by having an attorney review your agreement before you sign it, you can ensure that you are provided with the benefits that you expect. You can also take steps to ensure that the agreement is enforceable and contains the clauses you or your company needs to protect your short-term and long-term interests.

Skilled attorneys can provide advice and advocacy for both employers and employees during the process in which severance agreements are negotiated. An employee and an employer should each secure their own legal representation and advice so that their interests are protected. Speak to an attorney to learn more about the help that is available. Call The Law Firm of J.W. Stafford, L.L.C. at 410-514-6099 or contact us online today.