SEVERANCE PAY POINTERS
With so many people losing jobs, I have spent a lot of time talking to people about severance packages. After reviewing so many cases lately, there are a few key points that surface and people should be aware of them when considering a proposed severance package.
Employment Discrimination
First, don't sign the severance agreement if you have been terminated due to employment discrimination. If you sign the severance package, you will waive your right to bring an employment discrimination claim. Instead of signing the proposed severance agreement, you should negotiate for more severance pay. As an example, I reviewed a proposed a severance agreement for a client who I will call Ralph (not his real name). Ralph, was in his 60s, and he had worked for the company for about 12 years. He had been doing a great job, but he was told that the company needed to cut back and had to let him go. They also said his performance had been weak lately. But, the day after Ralph was fired, a younger man was sitting in his chair doing his job. And Ralph's performance was not weak, in fact, it was better than ever. Ralph hired my law firm and we negotiated a better deal using the facts that indicated a viable age discrimination claim.
Unemployment Benefits
People often assume that their employer will not contest their request for unemployment benefits. Remember, your company can dispute your request and argue that you were fired for poor performance or even allege that you resigned. Rather than take a chance on a future battle over unemployment benefits, ask your company to include a written promise not to dispute your claim for unemployment benefits in the severance package. It is a non-monetary concession that companies are often willing to provide.
Health Insurance Benefits
If your employment is terminated, most companies are required by COBRA to allow you to stay on their health insurance plan for up to 18 months or more. But, the employee must pay the insurance premiums and these can be costly. If you are offered a severance package, you should ask the company to pay your health insurance premiums for a few months. For example, if you are offered three months of severance pay, ask the company to include three months of COBRA payments as well.
These are a few common situations that arise in severance pay negotiations. If you need assistance with your severance package, give us a call.
