Spitz, The Employee’s Law Firm

Call The Right Attorney™

No Fee Guarantee

What To Know About Severance Agreements

by | Dec 16, 2022 | Employment Discrimination, Firm News |

Does my employer have to give me a severance package?

No, employers are not required to offer such severance payments to at-will employees. However, if you are a contract employee with specific terms that require a particular severance package or payment, the employment contract will control the requirements.

Best Lawyer Blogs On Point:

Do I have to sign a severance agreement when I’m fired?

No. And no matter how much the boss or manager who just fired you wants you to think that they are doing you a favor or helping you out by providing a severance package, you should never immediately sign a severance or end of employment agreement. Employees who have just been fired usually are not thinking clearly about every term that is in a severance agreement. Employers who know that the severance package offer is fair typically allow employees to review the agreement over several days or weeks. On the other hand, be weary of employers pushing for an immediate signature as they may be trying to sneak in key terms to the detriment of the employee.

Best Lawyer Blogs On Point:

Should I agree to a severance agreement so that I can resign instead of being fired?

In most cases, no. Many supervisors, managers or HR representatives will try to convince employees that they do not want a record of being fired, relying on an employee’s negative feeling about being fired. The truth of the matter is that signing a document that says you resigned may prevent you from obtaining unemployment compensation, which is typically not available to employees who quit. Moreover, it is standard practice for former employers not to provide reasons for separation of employment when providing references and instead, only provide dates of employment and positions held.

The only exception where resigning instead of firing may make a difference is where a termination may impact the employee’s licensure with a state board, such as with nurses or teachers. However, resigning – in and of itself – does not prevent an employer from reporting the alleged conduct that brought about the separation of employment. As such, it would still be better to hold off signing a severance agreement until you can have it properly reviewed to protect any licensure issues.

Can I negotiate my severance offer?

You can always attempt to negotiate a severance offer made by your employer. Your ability to negotiate a higher severance payment will likely be dependent on several factor that may motivate your employer, such as the strength of any claims that you may have, its desire to obtain a non-solicitation or confidentiality agreement, or simply that you know where too many of the companies bodies are buried.

Can my job revoke a severance offer?

Although most employers do not withdraw a severance offer, they can do so up and until there is an agreement reached – either orally or in writing. Moreover, under most state laws, which control contract formation, attempting to demand a higher severance offer will have the legal effect of rejecting the severance offer, meaning that should you attempt to go back and accept it later, your employer would then have the choice of whether to still provide it to you.

Can I still sue my former employer for discrimination or harassment if I signed a severance agreement?

Nearly all severance agreements contain a waiver or release of any claim that the employee might have had arising out of the employment relationship. Assuming the severance agreement contains release of claims, the employee will be prevented from filing any suit against the former employer absent some kind of fraud in the inducement (which is extremely hard to prove).

This is the exact problem that Valerie Pucilowski faced when she sued Spotify for Family and Medical Leave Act (“FMLA”) violations. Valerie suffered a head injury on the job and took some time off under FMLA. Once cleared by her doctor to return to work, Valerie showed up and was shortly thereafter presented with the choice – be fired or accept this severance agreement. Eventually, Valerie signed the agreement without consulting an attorney and took the severance benefits. Then one day, presumably, someone said to her, “boy, that’s a good FMLA claim that is worth more than Spotify paid you!” So, Valerie finally hired an attorney and sued.

After the District Court dismissed the claims, the United States Court of Appeals for the Second Circuit in Pucilowski v. Spotify USA, Inc., No. 22-869-CV, 2022 WL 16842926, at *1 (2d Cir. Nov. 10, 2022), affirmed and held:

Pucilowski’s own pleading demonstrates that these factors compel the conclusion that Pucilowski’s release of claims was knowing and voluntary. First, the complaint alleges that Pucilowski’s work as a user researcher at Spotify received high praise from coworkers and supervisors. This precludes any finding that she lacked the education or business experience to understand the release. Second, Pucilowski was given fourteen days to consider the agreement (but took only eleven days to sign it), was given seven additional days to revoke the agreement once it was signed, and agreed to the agreement’s statement that she had “consulted counsel or had the opportunity to consult counsel about this … agreement.” App’x at 23. These circumstances preclude any finding that she was not given sufficient time to knowingly and voluntarily release her claims. Third, the language of the release provision demonstrates the requisite clarity, unambiguously stating that Pucilowski releases Spotify “from any and all claims … including, without limitation, those arising out of or in any way connected with [her] employment or … termination” and further specifically releases claims under the FMLA and the NYCHRL. App’x at 22. Fourth, Pucilowski received two months’ salary in exchange for executing the separation agreement, a benefit exceeding what she was entitled to by law or contract. While Pucilowski was not represented by counsel in connection with the signing of the separation agreement and is not alleged to have had any role in deciding the terms of the agreement, under the totality of the circumstances pleaded by Pucilowski, we conclude, as the district court did, that Pucilowski’s execution of the separation agreement can only be deemed knowing and voluntary and, therefore, that the release is enforceable, precluding her claims.

Id. at *1.

To her credit, Valerie did not give up that easily and argued that she should be let out of the consequences of that agreement because she signed it following a head injury. However, the United States Court of Appeals for the Second Circuit pointed out that that her doctor had cleared Valerie to fully return two weeks before she eventually signed the agreement. As such, there was no basis to argue that her head injury lead to Valerie lacking the requisite mental capacity to enter a contract.

Maybe, had Valerie consulted an employee’s rights lawyer first, she would have still be able to bring her claims.

Best Lawyer Blogs On Point:

Should I get an attorney to review my severance agreement?

Yes! Certainly, since the employer took time to have a law firm draft the agreement over several days if not weeks, employees should take the same opportunity to have an attorney review the same document. Certainly, the employer is not gratuitously drafting a severance document to favor an employee that it is getting rid of. Having an attorney review the severance agreement will allow you to fully understand what the terms are, make sure that no unnecessary terms are being slipped in, and that you are getting the best and appropriate value. In addition to monetary value, a lawyer can attempt to get you certain non-monetary terms to help your situation.

An attorney can also help you evaluate if it would be better to pursue a wrongful termination based on your national origin, race/color, gender/sex (including pregnancy and LGBTQ+ status), disability, religion, and age.

Importantly, because every situation is different, no stock information on the web will give you direct answers to your situation. To that end, it would be best to call the right attorney to schedule a free and confidential consultation. (Read: What is the Spitz No Fee Guarantee?; Why Having Skilled Employment Attorneys Is Critical; Employment Law: Avoid Hiring The Wrong Attorney). Call our lawyers in Ohio, Michigan, North Carolina, and Kentucky to get help now. Spitz, The Employee’s Law Firm and its experienced attorneys are dedicated to protecting employees’ rights and solving employment disputes.

Disclaimer:

This employment law website is an advertisement. The severance agreement materials available at the top of this end of employment page and at this employee’s rights website are for informational purposes only and not for the purpose of providing legal advice regarding your wrongful firing. If you are still asking, “Am I bound by my severance agreement”, “how long do I get to consider a severance offer from my job,” “how much can I ask for in severance when being fired” or “what type of attorneys review severance contracts”, it would be best for to contact our top attorneys to obtain advice with respect to any particular employment law issue or problem. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.

Top Employment Lawyer Reply: Should I Get My Severance Agreement Reviewed Before I Sign?

Should I Consult A Lawyer About My Severance Agreement? Attorney’s Best Reply!