Severance and References

Typically, severance agreements handle employee references one of three ways.  Sometimes the agreement is silent on the topic of references altogether.  Commonly, severance agreements contain a “neutral reference” clause.  And rarely, they include a letter of reference.

What should I do if my severance agreement has no provision regarding a reference?  And what is a neutral reference anyway?

If your severance agreement has no language regarding how references to a future employer are handled, you should find out what – if any – company policies exist.  An increasing number of companies have strict policies stating that the only information they will provide is a neutral reference.  

A neutral reference is simply a statement regarding the positions you held and your tenure at the company.   Some large companies may use third party companies to provide neutral reference information for them.  So if your company has a neutral reference policy, you can relax and know that this how any potential reference inquiries will be addressed by your former employer.

If your company does not have a neutral reference policy, consider asking your employer to change the severance agreement to include a neutral reference clause.  Typically, employers are willing to do this because:  (1) a neutral reference does not cost the company any money and (2) they are only being asked to provide truthful information about your tenure and positions held.

Neutral Reference?  Doesn’t That Make Me Sound Bad?

A lot of people are afraid that a neutral reference will make them sound bad.  While we understand why someone might be concerned about this, it is often not worth worrying about.  First of all, so many companies have neutral reference policies, that these have become pretty standard.  Nobody reads into these any more.

Second, the purpose of a neutral reference is for a potential employer to verify your employment history (i.e. confirm that you are not lying on your resume).   Many companies hire third party background check companies who simply check your resume – a neutral reference is perfect for this.

Can Someone Say that I was Great?

Yes!  But that is on you. 

Talk to your former co-workers, supervisors, etc. and ask if they would be willing to sing your praises.  Obviously, this depends on your personal relationships, but that is outside the scope of your severance agreement.  When you are on the job hunt, reach out to your former colleagues, and ask them, “Hey, I am applying for a job at NewCo.  Would you mind if I listed you as a reference?” 

This is based on your relationships with your former co-workers.  And it is totally separate and apart from your neutral reference.

But I Want a Positive Reference!

Sometimes, a company will agree to provide a positive letter of reference with their severance.  This may make you feel better, but it is not always beneficial.  It is not always in your best interest.

As we mentioned earlier, neutral references are becoming more or less standard practice.  If a neutral reference is the standard, then what is an employer to think of a positive reference letter?  It might make your potential employer wonder what happened at the end of your employment.

Of course, it is much better than a negative reference (or no reference at all), so if you can get a positive reference letter, it is better than nothing.

What Should I Do?

Talk to a lawyer!  Granted, we’re biased, but transitioning employment is hugely important. It is a turning point in your life.  Surely it is worth investing a bit to make sure that the transition is as smooth as possible. 

 

The employment lawyers at Granovsky & Sundaresh PLLC have over two decades of experience dedicated to helping people through every employment law issue imaginable (and some unimaginable issues).  If you need us, we’re here to help.  Contact us today to schedule a consultation – your career is worth it.