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FAQs on Severance Agreements: Should I sign it?

Severance agreements are legally binding contracts. Consult an attorney to protect your rights.

Learning that you are being laid off or fired from your job is stressful, to say the least. In many cases, your employer will offer you a severance package and ask you to sign a severance agreement. Before you sign any severance agreement, you should know your rights and protect yourself financially and professionally. You should also consult an attorney to ensure your severance agreement is accurate and fair.

Here are some FAQs about severance:

Q: What is a severance package?

A: A severance package refers to a payment or other benefits an employer offers an employee upon termination of employment. Generally, an employer is not required by law to offer a severance package to every employee unless there was a previous agreement included in the terms of employment. Nevertheless, many employers voluntarily offer a severance package in order to limit liability and as a way of assisting employees. Employees who are terminated for poor performance or terminated for cause are generally not entitled to severance.

Q: What is a severance agreement?

A: First and foremost, a severance agreement is a legally binding contract between you and your employer that indicates you have agreed to accept a severance package as a result of the termination of your employment. You should realize that you are agreeing to the terms of the agreement, and the agreement will be enforceable. Signing a severance agreement will usually mean that the employee agrees to give up (or waive) certain rights in exchange for the payment specified in the agreement. The most important right that an employee waives by signing a severance agreement is the right to sue the employer for any reason, such as harassment, discrimination, retaliation, wrongful termination, or violations of the California Labor Code. In other words, your employer is offering to give you a payment in exchange for a promise that you will not sue them for terminating your employment. Also, depending on the severance agreement, you may be giving up other rights as well such as a confidentiality clause that prohibits you from speaking about the termination. Because you are waiving important rights, you should always consult with an attorney before signing a severance agreement.

Q: Are severance agreements enforceable?

A: Yes. Since the severance agreement is a contract, it is legally binding and courts will generally enforce the terms of the contract. That means, for the most part, you are bound by the terms of the severance agreement. Of course, there are some employment rights that are not waiveable under a severance agreement, and even if they are included will not be enforceable. These include rights that are strictly protected under California and/or federal law such as a dispute over unpaid wages or overtime pay you may be entitled to. However, for the most part, a severance agreement is enforceable absent certain theories of contract law such as duress, fraud or unconscionability.

Q: Do I have to sign a severance agreement to receive a severance package?

A: Yes. By design, you will not receive your severance package unless you sign a severance agreement. That’s why it is important to consult an attorney so you fully understand the terms of the agreement. But before you sign a severance agreement, you are free to negotiate the terms of the severance package. Remember, a severance package is merely an offer that you are free to accept, reject or negotiate. Of course, if you do not agree to a severance package, you will not receive any severance payment or benefits.

Once you are told that your employment is being terminated, you should consult the employee handbook to see what rights and benefits you have as an employee as well as any pre-employment terms and agreements to ensure the severance package fairly reflects any prior agreements. Also, there are also certain benefits that are protected by law that you are entitled to after termination such as COBRA for health care, and ERISA for retirement benefits.

Q: Do I need an attorney?

A: Yes. In all legal matters, it is best to consult with an attorney, particularly in a stressful situation like losing your job. Even if you are caught off guard, don’t rush to accept a severance package or sign a severance agreement. You have certain rights as an employee that are protected by law, and you need an experienced labor attorney to ensure your rights are protected.

Labor law is quite complicated, and losing your job is stressful. You should consider consulting an attorney to advise you about relevant local, state and federal labor laws that are enacted to protect employees. Also, an attorney should review the severance agreement to ensure the terms are accurate and lawful. More importantly, an attorney can advocate for you during this difficult situation.

FREE CONSULTATION

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is experienced in all aspects of employment law including severance agreements and have aggressively represented employees in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra.

If you or someone you know suffered employment violations as an employee or need advice regarding a severance agreement, you should be aware of the employee rights and protections under state and federal law to ensure the severance package is fair and accurate. Please contact us to speak with one of our lawyers for a free consultation.


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Fax: 213.471.4160