Employers that lay employees off may want to offer them severance pay to ease the burden of looking for another job. Doing so sets a positive tone with remaining employees who see an employer looking out for employees during a downsizing. These agreements also benefit employers because they almost always include a general release clause, in which employees agree not to sue employers for any past real or perceived wrongs.
If you are an employer who needs some guidance for treating departing employees or an employee who has been handed a stack of paperwork to sign after being laid off, speak to a skilled attorney. One of the Connecticut severance agreement lawyers at Sparks Law can sit down with you and discuss your situation.
Severance agreements are contracts that address several facets of employment and dismissal. For an employee to receive a severance package, both parties must give up something of value to gain something else of value, a mainstay of contracts called consideration. For example, employees give up the right to sue a former employee to receive a cash payment.
Some standard provisions contained in a severance agreement include:
Employers who negotiate for valuable restrictive behavior by employees cannot bargain with something valuable already owed to the employee. For instance, the employer cannot withhold an employee’s final wages while waiting for a non-compete agreement to be signed. The employer must offer additional consideration for the contract to be valid, such as payment beyond wages already earned. A well-practiced local attorney can examine the validity of consideration in a severance agreement.
The Older Workers Benefit Protection Act (OWBPA) dictates how employers should draft covenants in severance agreements that specify employees cannot sue their employers. Employers must make sure consideration is mutual and the document is written in plain English. Employers must explain employees’ rights under the Age Discrimination Act and must give employees reasonable time to consult an independent attorney and to sign the waiver.
If the waiver is associated with a mass layoff, the employer must provide detailed information about the terminated employees, their job functions, and ages of those doing similar work who have not been terminated.
OWPBA language is required in severance agreements, and if it is not present, courts can rule them invalid if employees challenge them. Our Connecticut lawyers understand the importance of OWBPA language in all severance agreements.
Severance agreements can be beneficial to both employers and employees. Employees can ask that the general release not to sue is mutual. Non-disparagement clauses could also bind both parties.
Employees can also request reference letters from employers. Because unemployment benefits are affected by severance pay, employees need to weigh resigning as opposed to being laid off. Connecticut employees and employers should consult a skilled lawyer on severance agreements to make sure the language is fair and does not cause unintended consequences.
Hopefully when an employee leaves their job, the transition is seamless. Employers may offer additional benefits to some of those employees to help them during this uncertain time.
If you are an employer who wishes to memorialize a contract that benefits you and your departing employee, reach out to the legal team at Sparks Law. If you are an employee, our Connecticut severance agreement lawyers can also review these contracts and answer any questions you may have.