Job loss is devastating on several levels. This devastation is even worse when an employer blindsides an employee with a severance agreement and insists on an on-the-spot signature. Frequently, a severance package feels like an employer is building a bridge to a new job. However, these agreements often contain language that wrecks bridges instead of building them. Employers often bury such language in the fine print of these agreements.
The experienced Paterson, NJ, severance review lawyers at HKM clarify these difficult situations. Attorneys help ensure that departing employees know precisely what legal and financial rights, if any, they are surrendering. Experienced lawyers also determine if proposed severance agreements are fair and equitable under New Jersey law. Once an employee signs on the dotted line, there is usually no going back. So, before signing anything, have an experienced New Jersey employment attorney review your severance agreement.
What is a Severance Agreement?
A severance agreement is a legal contract between an employer and an employee. A “contract” is a legal word for “give and take.” Generally, severance agreements compensate people (cash and/or non-cash) in exchange for the employee’s agreement to waive certain rights. Some of these waivers include:
- A release of legal claims,
- Confidentiality obligations,
- Non-disparagement clauses, and
- Non-compete or non-solicitation restrictions.
A severance agreement review lawyer in New Jersey can determine whether these terms are enforceable and whether they go beyond what the law allows.
Severance agreements are not very common in the Garden State. In New Jersey, employers are generally not required to offer severance unless it is part of an employment contract, collective bargaining agreement, or company policy.
Why You Should Never Sign a Severance Agreement Without Legal Review
Many employees assume severance agreements are standard and non-negotiable. That is rarely true. Employers often draft and customize these agreements specifically to protect themselves and uphold their interests.
An experienced Paterson, New Jersey, severance review attorney makes the law work for employees and not against them.
For example, in exchange for these waivers, many employers agree to additional severance pay or a longer extension of healthcare and other benefits. These negotiations may also result in the removal or overly-broad restrictive covenants that preserve the rights people have to obtain employment of their choice.
Additionally, a legal review of a severance package often uncovers possible legal claims employees didn’t know they had, such as wrongful termination or employment discrimination claims.
Key Issues a New Jersey Severance Review Lawyer Looks For
Severance review combines several different areas of law, such as contract law, employment law, and business law. A Paterson, NJ severance review lawyer uses these multiple legal skills in multiple areas.
Waiver of Legal Claims
Most severance agreements require employees to release their employer from liability. In New Jersey, this waiver may include claims under:
- The New Jersey Law Against Discrimination (NJLAD),
- The Conscientious Employee Protection Act (CEPA),
- Federal wage/hour laws, and
- State and federal employment discrimination statutes.
Sometimes, a waiver is simply an empty statement, because the employee does not have a claim in that area. But that is not always true. A severance review lawyer ensures the waiver complies with the law and does not improperly force you to give up rights you are legally entitled to keep.
Age Discrimination Compliance (Employees 40+)
If you are over 40, the Older Workers Benefit Protection Act (OWBPA) requires specific language and other severance provisions.
Employers must give workers in this protected class at least twenty-one days to review severance agreements and consult with a Paterson, NJ, severance review lawyer before they determine whether to sign or not sign them. Additionally, after they sign on the dotted line, their signatures are revocable for up to seven days.
Furthermore, all legal waivers must be written in clear language. Employers cannot use legalese and cannot bury these waivers in the fine print.
If the severance agreement fails to meet these standards, the agreement may be legally unenforceable, even if the employee voluntarily signed it. Moreover, the employer could be held responsible for forcing a person in a protected class to sign a one-sided and illegal agreement.
Non-Compete and Restrictive Covenants
If employers had their way, a severance agreement would include a promise never to work in that industry again. Because of this predisposition, New Jersey courts closely scrutinize non-compete clauses.
A severance review attorney considers all direct and collateral effects before determining whether restrictions on future employment are reasonable in scope, duration, and geography, whether they require legal modification, or must be removed entirely.
Confidentiality and Non-Disparagement Clauses
Similarly, many agreements attempt to silence former employees indefinitely. In New Jersey, certain confidentiality and non-disparagement provisions may violate public policy, especially when they interfere with whistleblowing actions or the discussion of workplace discrimination. At the same time, employers clearly have interests in this area.
A severance review lawyer can flag clauses that may be illegal or overly restrictive and help ensure that the agreement is fair to both parties.
Payment Structure and Benefits
A legal review of a severance agreement goes beyond the areas mentioned above and touches on issues like:
- Lump-sum vs. installment payments,
- Tax implications,
- COBRA or health insurance contributions, and
- Accrued vacation or bonus pay.
Errors in these areas could be unintentional or at least not malicious. Sometimes employers make mistakes, such as omitting compensation you are already owed. Malicious or not, however, such mistakes are illegal.
Can a Severance Agreement Be Negotiated in New Jersey?
Yes. In many cases, severance agreements are absolutely negotiable. Employers often expect some negotiation, especially when an employee is represented by counsel. During these negotiations, a New Jersey severance agreement lawyer may obtain:
- Increased severance pay,
- Neutral employment references,
- Removal of restrictive clauses,
- Extended benefits coverage, and
- Clarification of ambiguous language.
Even small changes to a severance agreement often make a big difference to your future financial stability and career mobility.
When Should You Contact a New Jersey Severance Review Lawyer?
You should speak with an attorney as soon as you receive a severance agreement, especially if the job termination came about unexpectedly or you have a gut feeling you may have a discrimination or other claim.
People also need lawyers to explain the complex Legalese embedded in many severance agreements, especially if the agreements include restrictive covenants. Basically, every employee should understand exactly what s/he’s signing.
Alternatively, you may believe the offer is fair, and that very well may be the case. Even in these situations, a review helps employees have peace of mind over the situation.
Reach Out to a Thorough Passaic County Lawyer
Fair severance agreements set people up for success after a job ends. For a confidential consultation with an experienced severance agreement review lawyer in Paterson, contact HKM Employment Attorneys LLP. Virtual, home, and after-hours visits are available.
