parts of severance agreement

I was fired and they say it was "for cause." Can I still get a severance?

No one likes to be fired, least of for a mistake or misunderstanding or a minor infraction.  But it happens all the time:  for whatever reason a boss doesn't want to work with an employee anymore and finds a reason to fire him or her. 

And that is all it means to be fired "for cause": it means your boss named a specific reason why you were being fired.  While being fired "for cause" may impact your ability to collect unemployment benefits, it does not necessarily impact your ability to negotiate a severance.

First of all, to put it simply, your boss may have lied.  Your boss may have said you were being fired for losing a small client, or for submitting the wrong paperwork, or for dinging the company truck.  But maybe your boss also wanted to fire you because he knew you were pregnant, or because he knew you would soon earn a bonus he did not want to pay, or because he knew you had complained about improprieties at the company. 

In such a case, your boss's stated reason for firing you is what lawyers call a "pretext."   In fact, you may have a claim against your employer for firing you in violation of law.  The bad news is that it is pretty common for people to be fired in violation of the law.  The good news is that illegal firings are one of the most common reasons why severances are paid.  In exchange for the employee giving up the right to sue their employer for the employer's illegal action, the employer pays the employee a severance. 

But even if your boss did not have some hidden and improper motive for firing you "for cause," that does not mean you cannot negotiate a severance, a payment of several weeks or months of salary on your way out.  Because if you have something of value that your company wants, they should have to pay you for it.  As we have discussed in previous posts, some common reasons our clients are able to negotiate severances are that they had:

  • ·         A claim to unpaid wages. 
  • ·         Good relationships with clients or customers. 
  • ·         Know-how, trade secrets and intellectual property
  • ·         Stock or shares or equity in the company. 
  • ·         Other legal claims against the company. 

Even if you have been fired for cause, if your company is asking you to sign any kind of separation agreement, or if you feel you have something of value that the company is asking you to walk away from, you may still have leverage to negotiate a severance.  Granovsky & Sundaresh is here to help.  Call or e-mail us any time.

Mutual Non-Disparagement Clauses in Severance Agreements

You may think you want a mutual non-disparagement clause in your severance agreement, but you probably don't need it.

Why You Should Never Sign a Severance Agreement Right Away

It has to be tempting to sign a severance agreement right away.  You were just terminated, you are probably wondering about how you are going to pay bills, make ends meet, find your next job, etc.  The severance you’ve been offered seems like a lifeline.  Maybe it is...

But You Should Never Sign a Severance Agreement Right Away.

Your severance agreement was written specifically to help your employer – not you.  Thus, your severance agreement makes you give up nearly every right you have under federal, state and city law, like claims for discrimination, breach of contract, defamation, unlawful termination, human rights violations, and certain wage payment laws.  The agreement may also prevent you from working for a similar employer, from contacting your former co-workers or clients, and making certain statements about the company.

Your employer also drafted the severance agreement to protect itself in the event that you breach.  For example, your agreement probably permits your employer to seek “injunctive relief” or to seek attorney’s fees in the event of a breach of the agreement (but does not permit you to seek attorney’s fees if the company breaches).

Your employer also drafted the severance agreement with an offer of payment.  That offer may not properly value the claims you are giving up, your contribution to the company, or your personal circumstances.  When I used to advise companies about how to draft severance agreements, I would always give them the following advice:

“You should offer the minimum amount that this person would accept to shut up and go away forever.”

Still Think You Should Sign Right Away?

Why not speak to a severance lawyer?  Granovsky & Sundaresh specializes in severance agreements.  We offer two services in this regard.  First, we can review your agreement with you paragraph-by-paragraph to make sure that, at a minimum, you are an educated consumer.  For some clients, however, we also negotiate severance.

Our Pricing For These Services is 100% Transparent:

  • For review and consultation, we charge a flat fee - $600.  This fee includes a complete review of your agreement, assistance with revising the agreement if necessary, and a bank of time for issues that arise in the future (e.g., if a non-compete issue comes up in the future, we will consult with you on this as well).
  • For negotiation of severance agreements, we charge a contingency fee of 1/3 of the monetary improvement we attain for you.  There is no fee unless we improve your severance.

Yes, You May be Able to Improve Your Severance

We specialize in negotiating severance agreements.  We have improved our clients’ severance agreements in 91% of our cases (as of April 1, 2017).

You owe it to yourself and to your career to understand and improve your situation. 

Contact us today.  Call 646-524-6001. You will be speaking to an specialized severance attorney within 24 hours.

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.

 

 

 

Explain My Severance - Part 6: No Consideration Absent Execution Clause

Explain my severance:  What is it?

The No Consideration Absent Execution Clause makes clear that the money (or other consideration) the employee gets pursuant to a severance agreement is separate and apart from anything else the employee is otherwise entitled to.  For any contract (and severance agreements are contracts) to be valid, each party has to get something.  If the employee only gets what he/she is already entitled to (e.g. already earned wages, commissions, or bonuses), then that employee gets no consideration by virtue of the severance agreement.

Explain my severance: What does it mean?

The No Consideration Absent Execution Clause means that if the employee does not sign the agreement, the employee does not get the consideration laid out in the severance agreement.  This does not mean that the employee does not get what he/she has already earned, only that the employee gets nothing more.

Explain my severance: What's the point?

The No Consideration Absent Execution Clause is a fairly standard "bells and whistles" provision in a severance agreement.  It is there to provide evidence that the employee got something of value in exchange for their promises (agreement not to sue, disparage, or disclose secrets of the company, etc.).  Honestly, it does not add a lot of value, because ultimately, the company if a company has to defend a severance agreement, it will have to show that the employee received consideration regardless of a No Consideration Absent Execution Clause.  On the flip side, an employee should not expect to receive the benefits of severance if he or she is not willing to sign the agreement.

Explain my severance: The Upshot.

A basic principle of contracts is that each side has to get something for a contract to be valid.  Thus, if the only thing the employee gets is something to which he/she is already entitled, that employee did not get anything at all.  A No Consideration Absent Execution Clause makes more clear that the employee is getting something "extra" in exchange for his or her promises, and that he/she gets nothing if they do not sign.  The tough question is usually not whether the employee is getting something in exchange for signing a severance agreement, the real question is whether the employee is getting enough given the value of his or her promises (helpful article).

Sample No Consideration Absent Execution

If you need help with your severance agreement, please feel free to contact us.  We charge a reasonable flat fee to review your severance agreement and offer same-day service.

Read More:

Explain My Severance - Part 1:  The Release

Explain My Severance - Part 2:  The Neutral Reference

Explain My Severance - Part 3:  Non-Disparagement Clause

Explain My Severance - Part 4:  Non-Admission Clause

Explain My Severance - Part 5:  No Re-Employment Clause