Washington state law allows employment relationships to begin with or without an employment contract. Most employees are employed on an at-will basis, which means that the employer does not guarantee that the employment relationship will last for any particular period of time. Instead, the employee can quit at any time without owing the employer anything; the law does not even require you to give your employer two weeks’ notice before you quit, even though most employees do this in order to be polite. In an at-will employment relationship, your employer is also free to end the employment relationship at any time without owing the employee anything other than pay for the time the employee has worked. Employers in at-will relationships can fire employees for almost any reason, as long as it is not discrimination or retaliation. Likewise, employment relationships can end without a signed document that formalizes the terms of the end of the relationship. Despite this, employers often ask employees to sign separation agreements when a layoff is the reason for ending the employment relationship.
By signing a separation agreement, you accept the employer’s offer of severance pay, but you also agree not to sue the employer for wrongful termination of employment. The Spokane separation agreement lawyers at HKM Employment Attorneys LLP can help you decide whether to sign the agreement and, if appropriate, can help you negotiate for a better severance package.
What is a Separation Agreement in Washington Employment Law?
A separation agreement is a legally binding agreement between an employer and an employee. The provisions of separation agreements vary from one separation agreement to another, but in general, all separation agreements contain the following elements:
- The separation agreement indicates that the parties to the agreement were in an employment relationship and that the relationship will end on the date specified in the agreement.
- By signing the separation agreement, the employee promises not to sue the employer for wrongful termination of employment.
- In many separation agreements, the employer provides the employee with some compensation, such as pay equivalent to several months of the employee’s salary. This is usually called a severance package.
Most of the situations in which employers offer separation agreements are employment relationships where the employee earned a monthly salary, with or without a written contract formalizing the employment relationship, rather than an hourly wage. Separation agreements usually appear in the context of mass layoffs, where the company is undergoing a major restructuring or reducing the number of its employees by a substantial percentage.
In some cases, though, an employer offers an employee a separation agreement shortly after the employee has complained to the human resources office about discrimination in the workplace or has engaged in a protected activity such as requesting Paid Family or Medical Leave (PFML) or filing a workers’ compensation claim. In cases like these, the separation agreement is not a benevolent attempt to soften the blow of layoffs but rather a preemptive strike to stop the employee from filing a wrongful termination lawsuit when he or she has a valid reason to do so.
Why Would You Sign a Separation Agreement if Your Employment Contract Already Outlines the Anticipated End of the Employment Relationship?
Some employment contracts contain provisions about compensation that the employer must pay to the employee at the end of the employment relationship. This compensation usually goes by the name of “end of service bonus,” but in practice, it is a lot like severance pay. In other words, it usually includes a lump sum payment equivalent to one month’s salary or more, as well as health insurance coverage that lasts for several months. If the employee relocated in order to take the position, the end-of-service bonus might include reimbursement for relocation to the city where the employee lived before the employment relationship began. End-of-service bonuses are more likely to be present in employment contracts that are not renewable, especially if the contract is for a well-compensated position.
Whether or not they provide for end-of-service bonuses, employment contracts often indicate penalties that the employer must pay, in the form of compensation to the employee, in the event that the employer terminates the employment relationship before the expiration date indicated in the contract. The difference between signing a separation agreement and accepting compensation pursuant to an early termination clause or end of service bonus clause in an employment contract might sound like a matter of semantics, but there is an important difference. When you sign a separation agreement, you lose the right to sue your employer for its actions surrounding the termination of your employment.
Severance Pay at What Price?
You should not sign a separation agreement if you have evidence that your employer violated the law by terminating your employment. For example, you should suspect wrongful termination if you are the only employee losing your job in the so-called corporate restructuring. Wrongful termination lawsuits are time-consuming, but former employees engage in them not only to recover their financial losses but also to prove a point about justice.
Only a small percentage of employees who lose their jobs in corporate layoffs sue their former employers for wrongful termination. If you are sure that you do not want to go through the stress and risk of a wrongful termination lawsuit, but the severance pay that your employer is offering you in a separation agreement is not enough, you have another option. You should negotiate with your employer for a better severance package and only sign the separation agreement after your employer has amended it to include adequate severance pay. A Spokane employment lawyer can help you negotiate for modifications to your separation agreement before you sign it.
Contact HKM Employment Attorneys, LLP About Separation Agreements
The Spokane employment lawyers at HKM Employment Attorneys, LLP can help you if your employer has offered you a separation agreement and you are not sure whether signing it is the best option. Contact the employment lawyers at HKM Employment Attorneys LLP in Spokane, Washington, to set up a consultation.