Three common provisions in employers' proposed severance agreements
Employees often come to me with a proposed severance agreement and general release they received from their employers. These documents can be called a number of things, including a separation agreement, and can take a number of different forms, such as a letter. Typically, they are given to an employee to consider upon termination.
Because the employer wrote it, the employer has sought to protect its interest in its draft. And, sometimes, the employer's interest is in direct opposition to the employee's interest. Because the employee also has her own interests to protect and advance, it is worthwhile that she review the proposed agreement with her own employment lawyer.
The following are three provisions commonly addressed in an employer's proposed severance agreement.
1. Severance pay
The employer has typically put some money on the table in exchange for a general release of all claims. Whether that amount realistically can be negotiated upward usually turns on the strengths and weaknesses of any claims the employee has as well as the interest the employer has in settling the matter.
An employment lawyer can conduct an assessment of the strengths and weaknesses of an employee's claims through discussion with the employee, a review of relevant documents, and sometimes, legal research. Because employment matters are very fact intensive -- potentially bringing in different players and varying incidents across time -- it can require some time to get into the weeds of what actually happened to bring about the separation of employment.
2. Nondisparagement
An employer will typically include a very broadly worded provision such that the employee "will not make any disparaging remarks of any sort or otherwise communicate any disparaging comments" about the employer, the employer's managers, etc., etc., etc. One of the problems with a provision like this is the enormous breadth of it as well as that there is no definition of "disparage." If an employee agrees to this, a casual remark by the employee such as "that place sucks" or "he's incompetent" about a former boss just may run afoul of it.
At the same time, an employee usually has an interest in not being disparaged by her former employer also. She does not want to be the subject of demeaning remarks by a former manager after she leaves, for example. Moreover, she wants to protect her reputation and future employment prospects by controlling what the employer can say on a reference call with a prospective employer. It is therefore important to negotiate the nondisparagement provision.
3. Confidentiality
An employer will typically provide a confidentiality provision in a proposed severance agreement that forbids the employee from discussing the terms and existence of the agreement. They don't want the employee to talk about the payment or anything else related to the settlement. They might be concerned that if word got out, it could encourage other employees to take action.
Some employees are just fine with keeping the agreement confidential; in fact, many prefer it. That said, they also do not want their employer or former managers to be discussing the terms of their separation either, and this may need to be added to the agreement.
Other employees, however, want to be able to talk about what happened. They feel wronged and don't want to be silenced. To the extent this is the case and the employer has included a confidentiality provision, it would require some negotiation.
The above are not the only provisions to negotiate in a proposed separation agreement, of course -- just some common ones.
Doorways Employment Law, LLC specializes in employment law counseling, strategic advice and representation to individuals across Massachusetts, including with respect to severance agreements. Contact Doorways for a consultation.
