The end of the employment relationship can be a challenging experience on many fronts, and a severance package adds another layer of complexity during a transitional and sometimes difficult time. Many employees face the dilemma of whether accepting a severance package will prevent them from pursuing legal action, such as a discrimination claim against their former employer. The concern is a valid one as severance agreements often include clauses with lots of fine print, and ultimately, everything is set up with the interests of one party as a higher priority. These clauses also are designed to have employees waive certain legal rights or claims. Knowing the implications of these agreements and your rights prior to making any major decisions and certainly before signing is crucial. Contact our experienced employment law attorneys to help you negotiate your severance package.
What is a Severance Package?
A Severance package typically includes a lump sum of money or other benefits offered by an employer to an employee upon termination. These packages are designed to ease the overall transition for employees who have lost their employment, providing them with financial support as they find their way to their next employment position. Severance packages can also include extended health benefits, outplacement services, and other perks.
The Role of Severance
Severance agreements are legally binding contracts between an employer and an employee. By signing this agreement, you generally agreed to waive certain rights, including the right to sue your employer for any claims arising from your employment or your termination often; this is referred to as a waiver of claims or release of claims clause.
Common Elements of Severance Agreements
Severance agreements often contain several key provisions:
- Waiver of claims: You agree not to pursue legal action against your employer for specific claims such as wrongful termination, discrimination, or harassment.
- Noncompete Clauses: Restrictions on your ability to work for competitors or start a competing business for a particular duration.
- Non-disparagement Clauses: You agree not to speak negatively about your former employer.
- Confidentiality Clauses: You must keep the terms of the agreement and specific information about your former company and employer confidential.
Can You Still File a Discrimination Claim?
The short answer is it depends. We’ve outlined some scenarios where you might still be able to file a discrimination claim, including but not limited to:
- No Release of Claims Signed: If your severance agreement does not include a waiver of claims, you retain the right to sue your employer for discrimination or other legal issues, too.
- Invalid Release of Claims: Certain rights cannot be waived even if you sign a severance agreement. For instance, you cannot waive your right to file a claim with the Equal Employment Opportunity Commission (EEOC) or pursue claims for unpaid wages, workers, compensation benefits, and unemployment benefits.
- Coercion or Duress: If you can prove that you were coerced or maybe pressured into signing the severance agreement, it could be deemed valid. These types of situations can include times you may have been threatened with negative references, blacklisted, or otherwise forced to sign against your will.
- Lack of Consideration: For a severance agreement to be enforceable, you need to receive something of value in exchange for waiving your rights. If you did not receive any additional compensation or benefits beyond what you were already entitled to, the agreement might not hold up in court.
- Age Discrimination Claims: Under the Older Workers Benefit Protection Act (OWBPA), employees over 40 must be given additional time to consider severance agreements and consult with an attorney. If these requirements are not met, the waiver of age discrimination claims may be invalid.
Practical Steps to Take
If you’re considering accepting a severance package while believing you’ve been discriminated against, completing several practical steps in your endeavor is critical. For one, you should consult with a skilled attorney who understands the terms of the severance agreement, can assess any waivers, and receive advice on your rights and options. Carefully review the agreement, paying close attention to the waiver of claims section to understand the right you might be giving up by proceeding. If the severance package is insufficient or includes unreasonable restrictions, negotiate for more favorable terms, like a higher severance payout or the extensions of any benefits—alternatively, the removal of specific clauses or stipulations. Additionally, document everything related to your termination, including emails, memos, and communications with your employer, as this documentation can be crucial for your discrimination claim. Finally, if you decide to file a discrimination claim, do so promptly, as strict deadlines apply to such claims, and delaying can jeopardize your chances of success.
Accepting a severance package does not automatically bar you from filing a discrimination claim, but it does require careful consideration and legal guidance. Understanding the terms of your severance agreement and your rights is crucial. Consulting with an experienced and trusted employment attorney can help you navigate this complex situation and ensure that your rights are protected. If you believe you have been discriminated against, do not hesitate to contact our employment law lawyers and explore all of your legal options before signing into any agreement.
