Most of the time, when people set up an appointment with a lawyer, it is not because of a happy event. Sure, there are exceptions. A couple that gets married late in life is happy to ask a lawyer to draft a prenuptial agreement to prevent disputes with stepchildren when one spouse dies. Likewise, if you are setting up a trust because you are already financially well off, and you think the trust will help you pass on even more generational wealth, then you are probably excited about the experience. People who hire a family law attorney to help them finalize the adoption of their child do so with joy. Being a client of an employment lawyer is not usually fun, though. If you are going to a lawyer because an employer has offered you an employment contract, you have reason to be grateful, but you might also be doing it because you are worried that signing the contract will put you in a more vulnerable position than you realize.
Most first meetings between employment lawyers and their clients are not joyous occasions, though. People consult lawyers because they are thinking of suing their employers, or because they fear that they are in danger of losing their job, or else they have been fired, and they believe that the termination of their employment was unfair and possibly illegal. Asking a lawyer to review a separation agreement before you sign it and receive a severance package is, at best, bittersweet, but it is a wise decision.
The Boulder severance review lawyers at HKM Employment Attorneys LLP can review the separation agreement that your employer has offered and help you make an informed decision about whether to accept a severance package.
Why Do Employers Provide Severance Packages?
A severance package is monetary compensation, and sometimes other benefits like the continuation of health insurance, that an employer pays to an employee when the employer ends the employment relationship. As a rule, employees who quit do not get severance packages, even though you might get end-of-service pay at the end of your employment, even when you are the one who decides not to renew the contract, if your contract says this. Severance packages usually occur when a company is downsizing its workforce, and some or all of the laid-off employees receive a severance package.
Yes, losing your job and getting a severance package is better than losing your job and walking away empty-handed. The only catch is that, to get the money, you must sign a separation agreement. By signing the separation agreement, you are promising not to sue your employer for wrongful termination of employment. In fact, if you sign the separation agreement and later sue your employer for wrongful termination of employment, the court will issue summary judgment in favor of your employer, because the separation agreement clearly says that you have waived the right to sue your former employer for wrongful termination. When you look at it from this perspective, the decision to accept a severance package is not as simple as it seems.
Should You Be Happy or Upset if Your Employer Offers You Severance?
If you could see the writing on the wall and you knew that your employer would be going out of business, then the severance offer would be a relief. Having no job is a bummer, but if you get the month’s salary, it is better than nothing; it gives you some time to get a new job, or at least to start receiving unemployment benefits if you do not find a new job by the time your severance pay ends. In most separation agreements, the employer agrees to continue paying your health insurance for a year, or even for two years, after you stop working for your employer. Therefore, by accepting a severance package, you have avoided the worst-case scenario, at least in the short term.
On the other hand, if you could choose between severance pay and keeping your job, you would choose to stay employed. A severance package is not a cushy settlement to keep you so financially secure for the rest of your life that not suing seems like a small price to pay. Before you decide whether to sign a separation agreement, it makes sense to talk to colleagues who have been in similar situations, and also to talk to a Boulder severance review lawyer.
What to Do After Receiving a Separation Agreement: Sign, Sue, or Negotiate?
Signing the separation agreement and accepting the severance package is the obvious choice if your employer is going out of business. You know that your employer is not unjustly firing you, because your employer is firing everyone. If losing your job will cause you great financial hardship, such as if your job is the only source of income for your household and you have dependents, then it might be worthwhile to negotiate for more money.
Likewise, signing a separation agreement and getting the severance pay is a good idea if you are in your 60s or older. You can get employer-provided health insurance until you become eligible for Medicare, and you can start drawing Social Security when your severance pay runs out. Losing your job is less devastating for you than it is for your younger coworkers who have minor children and whose 401(k) account balances are not as high as yours. In this case, it also makes sense to sign.
You should think twice before signing, though, if you are one of only a few employees losing their jobs while everyone else continues working for the organization. The severance package, as generous as it may seem, could be a front for discrimination or retaliation. Your employer might be offering you severance just to stop you from filing a lawsuit that you would likely win.
Contact HKM Employment Attorneys, LLP, About Severance Review
The Boulder employment lawyers at HKM Employment Attorneys, LLP, can counsel you about your separation agreement before you sign it. Contact the employment lawyers at HKM Employment Attorneys LLP in Boulder, Colorado, to set up a consultation.
