Although Florida does not require employers to offer departing employees severance pay, both employers and employees can benefit from it. Employees are paid additional money while looking for new employment, and employers can exchange that payment for releases of any legal claims against them. Severance can be memorialized in a separate agreement when the employee leaves, an employee handbook, or in an employment agreement.
Extracting duties from a departing employee is only legal if the employer also gives up something valuable. If you are an employer who needs an ironclad agreement for an employee leaving your company, or if you are a departing employee, speak to an experienced attorney at Sparks Law. A Florida severance agreement lawyer can help draft or review this crucial contract.
Contracts legally bind the parties to perform or refrain from certain acts. The parties agree to give up something of value to gain something else of value, also known as consideration. If only one party gives up something, the contract is likely invalid, and the exchange would be considered a gift.
For severance agreements, the employee usually gives up disparaging or competing with the former employer for additional money or extended benefits. Employers give up money to secure the former employee’s commitment not to sue or disparage them.
An employer who tries to bargain for non-disparagement or non-compete cannot withhold something already owed to the employee. For instance, a severance agreement will not be valid if the employee is required to sign it to release the last paycheck, which is already owed. Additional consideration is needed, such as payment beyond earned wages. A Florida attorney could help ensure that consideration in a severance agreement is mutual.
In 1990, the federal government enacted the Older Workers Benefit Protection Act (OWBPA). This act restricts what can be included in a severance agreement if the employer is asking the employee to waive the right to sue the employer. Some stipulations for waivers include:
If OWPBA language is not included in severance agreements, employees can challenge them, and the courts may deem the contracts invalid. A well-practiced lawyer can include OWBPA language in all severance agreements.
Severance agreements are not one-sided. Although employers are seeking a smooth transition when employees leave, some provisions satisfy both parties. Employees will probably be more comfortable if the general release not to sue the employer works both ways, and the employer also agrees to release employees from any legal claims it may have. Non-disparagement clauses can also work both ways.
The trend today is for employers to give employees neutral references when a future employer inquires. The references include only the time frame the employee worked for the company. This neutrality avoids subjective assessments that could end in litigation.
Employees can request reference letters that could be considered consideration on the employer’s part. The parties can also negotiate the employee’s resignation instead of termination, which can benefit an employee who wants to avoid the stigma of termination. However, employees should carefully consider resigning because the ability to collect unemployment benefits will be affected. A Florida attorney could advise employers and employees subject to severance agreements.
Employees may leave of their own volition, or they may be terminated with or without cause. Whatever the reason they are leaving, it may be beneficial to have a severance agreement that spells out what you owe them and what they owe you for a smooth transition.
When drafting a separation agreement, the attorneys at Sparks Law can address non-competition, non-disparagement, monetary consideration, and additional benefits. No matter which side of the employer-employee relationship you are on, our Florida severance agreements lawyers are here to answer your questions. Call for your initial consultation.