Why Experience Matters

What Should I Do If I Am Offered a Severance Package or Separation Agreement?

When an employer offers you a severance package or separation agreement, they are essentially saying to you, "Your employment is terminated, but we are willing to offer you money and other benefits, in exchange for the surrender of your legal rights and other terms we deem to be in our best interest.” The agreements are usually prepared by the employer’s attorneys and, predictably, drafted in a manner that is favorable to them. They often contain substantial volumes of “legalese,” that may significantly affect your career, livelihood, and reputation, and may even restrict your ability to secure future employment. It is therefore important to carefully consider the legal and practical implications of each term of the severance or separation agreement before signing and/or obtain competent legal advice. In many cases, the agreements actually contain language that specifically instructs the employee to seek legal counsel before signing the agreement. Such language may be a key indicator that the agreement is drafted in a manner that is favorable to the employer, and not to you.

The issues our attorneys will address with you, typically include the following:

• What legal rights am I giving up? As noted, severance agreements are typically drafted by employers/their attorneys and, as a result, will tend to contain language that is favorable to the employer. They often contain “release of claims” clauses that eliminate or restrict an employee’s right to sue the employer for wrongful termination, discrimination, lost wages, a defamatory employment reference or other damages; non-compete/non-solicitation provisions or confidentiality clauses that restrict an employee’s right to work in a competing business and/or use certain information they may have acquired on the job; non-disparagement or publicity clauses that restrict what the employee may say or do, post-employment; and provisions requiring the payment of the employer’s legal fees, and/or (liquidated) damages, if the agreement is breached. It is therefore important that the document be carefully analyzed to determine whether or not there is any illegal, detrimental, vague or inconsistent language, or provisions that may call into question the enforceability of the document. If these problems arise, alternative language should be thoroughly discussed, proposed and/or negotiated.
   
• Does the Separation Agreement Protect my Good Name/Reputation, and Provide me with an Acceptable Employment Reference? In my 29-plus years in this field, I have found that employees often view the protection of their good name, reputation and livelihood to be as important, if not more important, than the monetary value of their severance package. We are often called upon by our clients to negotiate, or take other appropriate steps to clear the client’s good name and employment record and/or obtain an acceptable employment reference, press release or letter of recommendation, moving forward. To that end, we will often work with the employer, or their attorneys, to negotiate for an appropriate statement, or “script”, that will be used in responding to any inquiries from prospective employers, business contacts, and other third parties. In an era where employers have been placing more emphasis on background and reference checks, and where the internet has become a tool for widespread public disclosures, non-disparagement provisions and publicity causes have become critically important matters for discussion, negotiation, and/or modification in separation agreements.
   
• Can I “Sweeten” or Improved the Package? Depending on the circumstances, our attorneys will often negotiate, or assist our clients in negotiating with the employer to try to significantly increase the amount of severance pay, health insurance, and other benefits they receive. We may also negotiate for provisions which purge the employee’s personnel file of any negative statements or warnings; provide the employee with a positive letter of recommendation; eliminate or reduce any restrictions on the employee’s right to compete or solicit customers; forgive any debts owed to the employer; reduce or limit the tax consequences associated with the agreement; obtaining a lump sum pay out; and obtaining the employer cooperation with respect to the employees claim for unemployment insurance benefits. There are no set “rules of thumb” regarding how much severance pay and other benefits an employee is entitled to. The process typically involves the weighing of legal and non-legal parameters and application of sharp negotiation skills and many years of experience. The factors which typically tend to favor a positive resolution include: employee loyalty and years of service; positive achievements; a good record of performance a concern that the employee may compete and/or convey information or opinions that are not favorable to the employer; extenuating circumstances that may justify additional pay or benefits; and the strength or weakness of the employee’s potential legal claims. Keep in mind, one of the primary things the employer is “buying” in a severance package is peace, confidentiality and freedom from any future lawsuits. It is, therefore, important for you and your attorneys to gauge the specific value of the rights you are surrendering, so as to pursue the appropriate monetary amount and ultimate “end game” in negotiation. For example a 25-year, stellar employee with a strong age, gender, or disability discrimination case worth $500,000 and the ability to solicit key customers, may not be well-advised to accept a severance package of $1,000. By the same token, an employee who has little or no legal case, and is offered a severance package valued, may be well-advised to accept the offer. Each case is different. The strategy and outcome depend on the circumstances presented, and our attorneys will go the extra yard to make sure that your negotiation strategy is tailor-made to the specific situation you are facing.
   
• What about COBRA rights, 401K Rollovers, Pensions, and the Right to Unemployment Benefits? Our law firm can also assist you in addressing important issues relating to COBRA health insurance continuation; life issuance portability; 401K rollover; pension payouts and procedures; payment of accrued vacation and expenses; matters relating to eligibility and application for unemployment insurance benefits; and related post-employment matters. Addressing these issues, early and effectively, increases the employee’s likelihood of a smooth transition, without any adverse legal or financial consequences. 

Our Firm’s Approach and Philosophy to Severance Packages and Separation Agreements:

Though losing a job is never easy, what ultimately matters most, is how well you handle it. Our law firm believe that the best way to assist a client who has been handed a severance or separation agreement is to carefully evaluate the “hand you are dealt”, and make sure it is played in the best manner possible legally and professionally. Because our attorneys practice exclusively in the field of employment law, we are able to provide the personalized service and legal analysis and practical insights that will ensure your severance package/separation from employment is handled responsibly, and with the best possible outcome. Our services include, but are not limited to, the following: (1) reviewing the agreement to determine whether it is legally sound and/or whether it restricts your right to compete and/or pursue future employment opportunities; (2) attempting to negotiate for additional pay and benefits (or other favorable terms), where appropriate; (3) pursuing an acceptable employment reference or other avenues to preserve your good name and reputation; and (4) working to obtain prompt closure and a successful transition, tailored to the unique circumstances of your termination from employment.

Our Firm’s approach is aggressive but practical. We make every effort to advise and/or negotiate on behalf of our clients in a manner designed to obtain maximum results without “burning any bridges” or involving the client in unnecessary legal disputes. In many cases, we provide advice to clients on a strictly confidentially basis, without any disclosure of our involvement in the matter to the employer. In other cases, if the client prefers, we may reach out to the employer to address and/or negotiate regarding the issues that are central to our client's objectives. Regardless of the approach taken, our firm pledges to provide you with experienced legal counsel, who are knowledgeable about the legal, as well as the practical parameters involved and analyzing, negotiation and/or bringing issues relating to your employment separation, to prompt and successful conclusion.

If the client ultimately decides they are not interested in signing a severance/separation agreement, then alternative options such as the filing of a corporate grievance discrimination complaint (or wrongful termination action), and/or a lawsuit in the state or federal courts, may be explored. In most cases, the name of the game is “leverage.” It is therefore important that you and your attorneys carefully review and evaluate your work history, as well as the specific circumstances surrounding your termination in considering whether or not to sign a severance/separation agreement. In the event you hire a lawyer to advise/represent you, you will likely be best served by someone who not only understands the law, but is also an experienced advocate and negotiator.

Our Firm’s managing partner, Jeffrey S. Hynes has practiced exclusively in the field of labor and employment law for more than 29 years, advising and advocating for clients in both the private and public sectors. Attorney Hynes has an outstanding reputation with his peers, as well as his adversaries. His credentials include being recognized in Wisconsin Super Lawyers – Labor and Employment Law (2005-2014), Legal Leaders™ (2012-2014) and Milwaukee Magazine’s, “Best Lawyers” Edition (1999). Attorney Hynes has served a lengthy tenure as President/Co-Chair of the Wisconsin Employment Lawyers Association, serves on the Board of Directors for the Wisconsin State Bar – Labor and Employment Section, and is a long-standing member of the National Employment Lawyers Association. A Wisconsin native, Jeff is a Phi Beta Kappa graduate of the University of Wisconsin-Madison and also obtained his Juris Doctorate "of Law" Degree from the UW Law School in 1984.

Finally, a word about fees. The attorney’s fees and/or costs clients typically incur in connection with severance package/separation agreements tend to be minimal, compared to the fees and costs associated with litigation, and other services typically provided by employment law attorneys. Most cases involve a short period of review and focused advice. In our view, the key focus for people facing a separation from employment is to do it right the first time, obtain the best outcome possible, and then promptly move on with your lives.

For any questions or concerns contact Hynes & Kuhn, today: 262-505-5678