Severance Agreements: Why Review and Analysis Are Essential, and When to Seek Legal Advice

When deciding whether to sign a separation agreement or severance agreement with your employer, consider the following issues:

1. Consideration: What are you getting for your signature?  What are you giving up?  Is the trade-off worth it?

    

2. Waiver of legal rights: Check if the agreement requires you to give up your right to sue the company for any claims you may have, such as discrimination, harassment, or wrongful termination.
3. Confidentiality: Does the agreement contain any provisions that limit each side’s ability to discuss the terms of the agreement or the circumstances surrounding your separation from your employer?  Note that a recent ruling by the NLRB may make confidentiality provisions problematic for employers.
4. Release of claims: Make sure you understand what claims you are releasing and whether you are comfortable doing so.  Are you getting a release in return?  Don’t leave your flank open.
5. Unemployment benefits: Will signing the agreement impact your right to receive unemployment benefits?
6. Non-compete clauses, nonsolicitation provisions and other restrictive covenants: If the agreement contains a non-compete clause or similar provision, or if you have an existing noncompete agreement, consider how it will impact future employment.  Don’t just assume that a non-compete will not be enforceable.  In Massachusetts, there are different rules for a non-compete agreement entered as part of a settlement of your termination from employment.
7. Continuing benefits: Clarify what benefits, if any, you will continue to receive after your separation from the company.
8. Negotiations: Consider whether there is any room for negotiation regarding the terms of the agreement and whether you want to hire an attorney to negotiate on your behalf.

Of course, you need to review the agreement carefully.  You should consult with an experienced Massachusetts employment law attorney if you have any questions or concerns.  Make sure you understand the severance agreement or general release completely, including all the boilerplate and legalese.  Review your options and know what rights and claims you may have and how you might seek to enforce them.

By Adam P. Whitney, Esq., [email protected]; 617.338.7000