Most employees in the United States, including most employees in Colorado, are employed on an at-will basis. This means that the employee can quit at any time for any reason, and the employer can fire the employee at any time for almost any reason; discrimination and retaliation are still illegal reasons for termination of employment, even in an at-will employment relationship. Therefore, most employment relationships end with little fanfare, and of course, they end with no strings attached. After the employee stops working and after the employer issues the employee’s last paycheck, they are both free to move on.
If the employee signed an employment contract, then the contract governs the end of the employment relationship. It might say when the employment relationship will end, and it might include procedures for extending the term of the contract or ending it early. In cases like these, the employee might get an end-of-service bonus, or the contract might include non-compete provisions that limit where, when, and in what market niche the employer may establish a new business after he or she stops working for the employer.
In some cases, though, the employer may offer the employee a new agreement at the end of the employment relationship, whether the employee had a contract or was working at will. The agreement may include severance benefits for the employee. The decision about whether to accept a severance package is more complicated than it seems at first. The Boulder severance lawyers at HKM Employment Attorneys LLP can help you decide whether the severance package that your employer is offering you is fair and decide what to do if it is not.
No One Wins When Employment Relationships End Because of Financial Hardship
Under ideal circumstances, an employee would continue working at his or her job until the employee retired, and if the employee had a contract with a pre-determined end date, all the conditions would exist so that the employment relationship could end in the manner that the contract indicates. In some cases, though, employers cannot afford to retain all their employees for as long as they originally planned. When this happens, the employer might ask the employee to sign a separation agreement.
By signing the separation agreement, you get the severance package listed in the agreement. A severance package typically includes payment of your salary for several months after the employment relationship ends, and it usually includes continuation of health insurance coverage for at least that long. If you have an employer-provided 401(k) retirement account, the separation agreement also indicates what will happen to this account.
The goal of the severance package is to mitigate the financial disruption caused by the employee losing his or her job. If everything works out in the employee’s favor, the employee will find a new job by the time the severance payments end. There is no guarantee that you will find a new job that soon, though. A severance package is only a sweet deal in comparison to losing your job and walking away empty-handed; it would be much better to remain employed.
Do You Qualify for Severance Pay?
Unfortunately, not everyone gets severance pay. Employees only offer it if they are going out of business or reducing their workforce by a significant portion, such as in the event of a corporate merger or a financial restructuring. When this happens, they might not offer severance packages to all the workers who are losing their jobs; they might offer them only to the most highly paid employees. As unfair as it sounds, severance is one of many aspects of life where the rich get richer.
Employers might also offer severance packages if only a few employees are losing their jobs, or even only one, but the employer worries that the laid-off employees will sue for wrongful termination of employment. That is the other main component of a separation agreement. By signing the agreement, the employee accepts the severance package, but he or she also agrees not to sue the employer for wrongful termination of employment.
Think Twice Before Accepting a Severance Package
If there is no option to keep your job, signing a separation agreement might seem like the obvious choice, because you will get more money from the severance package than you will from collecting unemployment, at least until the severance pay runs out. As with any legally binding agreement, you should review it with a lawyer before you decide whether to sign it. A Boulder employment lawyer can point out the implications of the severance agreement that you might not have noticed. For example, does the agreement include dispute resolution procedures whereby you can sue your employer if they do not give you the severance benefits listed in the agreement? Are there vaguely worded clauses about actions by the employee that would invalidate his or her right to receive the severance pay? Likewise, if you think you have a chance of getting more severance pay than the agreement indicates, your lawyer can help you negotiate for a better severance package.
If you think that the separation agreement, no matter how generous the severance package, is a cover for wrongful termination of employment, your Boulder employment lawyer can help you strategize about how to proceed with your wrongful termination claim. For example, your lawyer can help you document evidence that your employer ended the employment relationship and offered the separation agreement in retaliation for a protected activity, such as filing a workers’ compensation claim or reporting employer misconduct. If discrimination played a role in your wrongful termination of employment claim, you must follow the procedures for discrimination claims, which involve getting authorization from the Equal Employment Opportunity Commission (EEOC) before suing your employer in court.
Contact HKM Employment Attorneys, LLP, About Severance
The Boulder employment lawyers at HKM Employment Attorneys, LLP, can counsel you about accepting or amending a severance package. Contact the employment lawyers at HKM Employment Attorneys LLP in Boulder, Colorado, to set up a consultation.
