severance and quitting

Can I Quit and Still Get Severance?

Can I Quit and Still Get Severance?

Quitting makes it much harder to get severance.  Technically speaking, in order to bring an employment lawsuit, one usually has to have suffered what is called an adverse employment action. But we can help!

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.

I am on FMLA leave from my job, and I don't want to go back. Can I still get a severance?

It's common occurrence.  Maybe you just had a baby, and took some unpaid leave.  Maybe a family member got sick, and you needed some time off.  Maybe you got sick yourself, and had to miss work for a number of weeks.  In any case, right now you aren't going to work, but under the FMLA, or Family Medical Leave Act, your employer is holding your job open for you when you get back from leave. 

Except you don't want to go back.  Maybe you decided that you want to be a stay-at-home dad or a stay-at-home mom.  Maybe you found a new job that is more flexible, and will let you care for your sick relative long-term.  Maybe you have decided to go into business for yourself.  In any case, while you were on FMLA leave, you've made up your mind that you did not want your old job back.

Before you tell your old employer about your new plans, you should decide whether you want to negotiate a severance, and, if so, you should give careful thought to what you tell your employer, and when.

As we have discussed in previous posts, one simple question is ask yourself is this:  What are all the things your disliked about your old job?  Because some of the reasons why you don't want your old job back might be the basis for negotiating a severance:  

  • Did your old company ever fail to pay you, or take a cut of your commissions, or "forget" to pay you for overtime, or promise a bonus but not follow through?

  • Did your old boss or co-workers ever say or do anything that made you uncomfortable for being who you are? Was there someone at work who sometimes harassed you, or bullied you, or made remarks that just were not okay?

  • Did your old company make it hard to take family medical leave?

  • Did your old company refuse to accommodate you when you got sick?

  • Was your old company open to people of all backgrounds, races, religions, and sexualities?

If any of these situations rings true, you might have a legal claim against your old employer.  Your employer likely would be interested in avoiding even the possibility of a lawsuit, and so might be willing to negotiate a separation agreement with you, even though you are on FMLA leave.  In that separation or severance agreement, you would promise never to sue your company for anything that happened during your employment, and your company would pay you a severance.

Even if your old company was totally upstanding—respectful, accommodating, and fully professional—you may still be able to negotiate a severance while on FMLA leave.  For example, many companies ask departing employees to sign "separation agreements," in which the former employee promises not to compete for their old employer's clients or customers, or not to disclose their former employer's trade secrets or proprietary information.  If your former employer wants to control your future behavior, they should pay you for that, even though you are on FMLA leave.

Many employers shy away from firing anyone who has recently returned from FMLA leave.  Simply put, the employer does not want to appear to be punishing its employees for having exercised their rights to family medical leave.  What this means is that, if you are on FMLA leave and you know you do not want to return to your job, you have leverage that can be used to negotiate a severance.

If you are on medical leave from a job you don't want to return to, and if you want advice on how to negotiate your departure, 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.

Checklist for Negotiating Severance Agreements

Our firm specializes in negotiating severance agreements for recently terminated employees.  We’ve negotiated severance agreements all over the country from our offices in New York City and Cleveland.  Since we formed our firm, we have improved severance for over 93% of our clients.  You can read our reviews on Google, Avvo, and Yelp.

When we talk to our clients about severance, we generally go through the below checklist.  We don’t always discuss every bullet point with every person, but this should provide a general overview. 

·         Is it Fair?  Here’s the basic transaction:  in exchange for severance (money) the company is getting you to promise not to sue them (and sometimes a bit more).  Are you getting fair value for your promise?  That depends on what your promise is worth – in dollars and cents.  It also depends on common sense.  How much did you give your company in blood, sweat and tears?  Is that being valued (it does not have to be – but it should)?   We work with clients to help them better understand if their offer is fair and help them work towards a more equitable deal whenever possible.

·         Reason for Termination.  This is a big one.  If you believe that the company terminated your employment for an illegal reason (e.g. discrimination, retaliation, etc.), the claims that the company is asking you to release can be quite valuable.

·         Potential Claims.  Like your reason for termination, if your employer violated the law, you have viable claims against the country.  We discuss whether each employee was properly compensated for all time worked, and also explore whether the employee has viable claims under OSHA or Dodd-Frank.

·         Confidentiality.  Map out what is and what is not confidential.  While a company certainly wants to keep its trade secrets (and secrets generally) private, you need to be free to describe your work to potential employers, etc.  Plus there may be certain aspects about your employment that you want to be kept confidential.

·         References.  Severance is about your future, so working out how your references are going to be handled is critical.  A neutral reference usually covers this, but, sometimes, you can iron out a reference letter from your former employer which you can then present to potential employers.  These are fairly rare, but that does not mean you should not look into it in certain circumstances.  Here is an article on neutral references.

·         Personnel File.  You may want an opportunity to review and/or copy your personnel file for your records.  A personnel file would typically contain information about your pay, benefits, and performance.  Even if you cannot get access to your entire file, there may be some information about your employment (salary, benefits, accrued vacation, etc.) that you may want to know.  Think through what information you want.

·         Return/Retention of Company Property.  Most severance agreements require employees to return all company property.  But what if you’ve grown attached to your company-issued laptop or smartphone?  Do you have important personal information on your work e-mail account?  Think through what you might want to keep.

·         Restrictive Covenants.  As noted above, severance is about your future.  Restrictive covenants (non-competes, non-solicits, etc.) can have a major impact on what you are allowed to do after your employment has ended.  If you are subject to a restrictive covenant, your severance agreement may be a good place to revisit the issue.  But you have to be delicate when you address this issue – nothing says “I intend to compete with the company” quite like saying “I want to talk about my non-compete agreement.”

·         Other Pay.  Don’t leave any money on the table.  Make sure all of your earned wages, commissions, vacations, sick leave, etc. have been paid.  Figure out your pension, 401K and benefits.  Make sure that you get everything that you’ve earned.

·         Stock Options.   When are your stock options exerciseable?  Separation from the company may accelerate the time.   Also, if you have acquired stock, majority shareholders may owe you a fiduciary duty to disclose material info about the company stock. You may be able to force the company to repurchase the stock.

·         Future Relations.  Can the company hire you back?  Can you be a consultant, or independent contractor for the company?  Does getting another job (with the company or another company) impact your severance? 

·         Taxes.  Talk to an Accountant.  Figure out how your severance is going to be taxed.    Typically, severance payments are taxed as wages, but not always.  Clever accountants are great at coming up with creative solutions to tax issues related to severance.

If you think you might want to talk to a lawyer about negotiating your severance, please contact us – this is what we do.

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

 

Explain My Severance - Part 5: The No-Reemployment Clause

Explain my severance:  What is it?

The No-reemployment clause prevents a departing employee from coming back to the company.  This is part of the consideration that goes to the company.  In exchange for severance (money, benefits, reference, etc.), the company gets, among other things, a promise from the employee to go away.  And stay away.  The no-reemployment clause is the second promise - to stay away.

Explain my severance: What does it mean?

The no-reemployment clause is self-explanatory.  It says don't come back.

Explain my severance: What's the point?

The no-reemployment clause closes a "situation" for an employer.  It effectively closes the chapter on an employee.  There are many reasons that companies like these, but there are two primary reasons.  The first is the obvious, the employee is being paid to go away and stay away.  This justification is especially useful for problematic employees or when there is a contentious relationship.  The second reason is that is helps a company avoid liability for a later claim (by the same employee) for discriminatory or retaliatory failure to rehire.

Explain my severance: The Upshot.

It is the rare employee who is terminated and then wants to come back.  It is even more rare in the case of a no-reemployment clause.  The good news is that most companies retain the option of re-hiring an employee.  And this does happen from time to time.  If an employee has a good relationship with his or her former employer, nurtures that relationship, and an opportunity comes up, that company may still re-hire the employee even in the face of a no-reemployment clause.  For the most part, this clause simply gives the company an easy way to say no.

Sample Non-Admission Clause

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 4: The Non-Admission Clause

Explain my severance:  What is it?

The Non-admission clause is a statement by your former employer that, even though they are paying you a severance, they are not admitting to anything.  In addition to non-admission, the company usually also expressly denies having done anything wrong.

Explain my severance: What does it mean?

A non-admission clause is self-explanatory.  The company is not admitting anything (this is what "non-admission" means).  Even though the company is paying a severance, and even if the severance is substantial, there is no admission of any wrongdoing.  These clauses are very common.  In fact, even when there is a lawsuit, settlement agreements typically contain non-admission clauses.

Explain my severance: The Upshot.

It is unclear how much value these clauses add because: (1) severance/settlement agreements typically contain confidentiality clauses which prohibit the employee from disseminating the terms of the agreement, (2) a severance/settlement agreement settles and resolves the dispute between the company and the employee, so even if it is an admission, the employee cannot bring a claim, and (3) even without the non-admission clause, there is usually nothing else contained in a settlement or severance agreement which could constitute an admission.  Nevertheless, companies like these clauses because non-admission clauses preclude the possibility that a confidential settlement agreement will be used against the company in the future.

Sample Non-Admission Clause

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