Maryland is an at-will employment state, which means that an employer or employee can end the working relationship for almost any reason. An employer is not required to provide an employee with any additional benefits outside of their final pay, but in certain situations, the employer and employee may utilize a separation agreement. This document provides incentives for both the employer and employee and can be beneficial for workers who are not leaving their position on the best terms. To learn more about whether you are entitled to a separation agreement in the Baltimore area, call or contact HKM Employment Attorneys, LLP today to schedule a consultation of your case.
Reasons for a Separation Agreement
There are many reasons why an employer or employee may request a separation agreement at the end of a person’s employment. Although Maryland is an at-will employment state, there are limitations on why an employer can terminate an employee. One example is because of discrimination, or when an employer takes an adverse employment action against an employee because of their actual or perceived protected class, including their race, color, national origin, religion, age, gender, disability status, military status, genetic information, and marriage status. Another example of a prohibited reason for terminating an employee is in retaliation for the employee engaging in protected conduct, such as taking covered leave, reporting illegal activity, or participating in an investigation of the employer. When an employee has cause to file a lawsuit against the employer for wrongful termination, they may request the use of a separation agreement instead to avoid litigation.
Separation agreements are also helpful when the employee leaving has certain information or knowledge that could be useful to competitors or harmful to the employer if it is disseminated. While this is applicable to almost any industry, separation agreements are more common in areas of tech companies, startups, and other companies in the STEM fields.
Terms Included in a Separation Agreement
A separation agreement is similar to other types of contracts, where each side negotiates and receives a benefit in exchange for something else. The terms involved in separation agreements can be lengthy and complex, which is why it is always smart to have an experienced employment law attorney on your side when negotiating and reviewing a separation agreement with an employer. Some of the most common terms included in Maryland separation agreements include the following:
The main benefit provided to a departing employee in a separation agreement is additional compensation beyond what they would already receive from their final pay. This is often referred to as consideration or severance pay and can include both wages and additional benefits for the employee. The agreement should also include details about the timing and method of payment to the employee after the employment has ended.
General Release of Claims
In exchange for the additional compensation, one of the main benefits that the employer receives is a general release of claims, also known as a claim waiver. Here, an employee waives their right to file a lawsuit against the employer for certain claims, such as wrongful termination for retaliation. It may include a waiver against the employer generally as well as specific supervisors or other employees within the company.
Details of Separation
The details of the separation are also often included in a separation agreement. This may include the final date of employment, identification of the reason for the end of the employment, and anything else prudent to the separation of employment between employee and employer.
Many separation agreements also contain a provision for confidentiality. Employers do not wish to have the terms of their separation agreements known to others, and a confidentiality clause keeps those terms under seal. This section may include exceptions to the confidentiality rule, such as discussing the terms with an accountant or lawyer, and it may also provide what an employee is allowed to say if questioned about the terms of their separation agreement.
In certain specialized areas, the departing employee may be the only person with knowledge or information important to their employer. As such, a separation agreement may contain a clause that the employee is required to debrief the employer on their work before they leave, train another employee, create a succession plan for their work, or reserve the right to communicate with the former employee about the nature of their work after they have left the position.
Non-Disparagement of Employer
Depending on the circumstances of the case, an employer may also request a non-disparagement clause in the separation agreement. This is particularly true if the employee is leaving because of a wrongful termination or other situations where there is bad blood between the employee and employer. A non-disparagement clause can restrict the employee from making remarks publicly about their former employer or commenting about their former employer at a new job.
A separation agreement can also contain the additional benefit to the employee of providing a reference for future employment. The reference can be written and attached to the separation agreement, or the general terms of a reference can be contained within the agreement. This provision can also stipulate what information the former employer cannot provide if called for a reference for the employee.
Finally, the terms of the separation agreement itself may be cause for future disputes between the employer and employee. As such, a separation agreement often contains a dispute resolution clause that stipulates how any future issues are to be resolved between parties. Oftentimes, this clause requires mediation or arbitration between employer and former employee before any claims can be filed in court.
The terms of a separation agreement can be confusing and complex for any employee, which is why you should always have a knowledgeable Maryland employment attorney in your corner to ensure that you are receiving the best possible terms in your separation agreement.
Contact an Employment Law Attorney in Baltimore Today
Do you have further questions about requesting, negotiating, or signing a separation agreement with your employer in the Baltimore area? Then call the office or contact the lawyers of HKM Employment Attorneys, LLP to schedule an evaluation of your case.