A severance package is an important part of any employment contract and defines the benefits that an employee will receive upon termination of his or her employment. Additionally, a severance package may contain stipulations pertaining to the employee’s future career prospects, such as a non-compete agreement, so while severance pay may sound solely beneficial to the employee, there is much to be gained by the employer as well, and sometimes at the cost of the employee’s future. A severance package may even have language that prohibits an employee from filing a wrongful termination or discrimination lawsuit against the employer.
The Importance of Reviewing Severance Packages with Your Attorney
Many new employees are so excited about getting their new job that they do not take the time to carefully read their terms of employment and severance agreement. Moreover, they may be so eager to get started, and do not want to make their employer immediately regret hiring them, that they agree to whatever severance package is put before them. However, by not reading and fully understanding your severance package, you are setting yourself up for potential regret down the road.
Aspects of a Typical Severance Package
Some parts of a severance package may contain the following:
- Severance Payment: Severance pay is not a requirement by federal or state law, and does not fall under the Fair Labor Standards Act and minimum wage, according to the Department of Labor. Severance payment is only required by law when your employer has 100 or more employees and conducts a massive layoff without 60 days prior notice, according to the WARN Act. Severance pay may be in the form of a lump sum, the final paycheck, or payment for unused vacation or sick days;
- Termination Provision: The end date of employment;
- Full Release: Employee waives their rights to file a complaint against their employer for discrimination, unpaid wages, or wrongful termination, as examples;
- COBRA Information: The employee’s right to remain on their group health insurance for a set amount of time after termination;
- Confidentiality Agreement: The employee must keep certain information secret, such as trade secrets or recipes;
- Non-Competition Agreement: The employee cannot work in the field for a competitor for a set length of time;
- Non-Solicitation Agreement: The employee is not allowed to contact the employer’s business clients for a set period;
- Non-Disparagement Agreement: The employee is barred from making negative public comments about the employer for a set length of time.
An HKM Employment Non-Compete Attorney is Here to Help Today
You need to know what you are getting into before you sign anything, and work with an attorney that can not only help you understand what the contract says, but assist with a new draft to send back to your employer as a compromise if necessary. An attorney will be able to see through complicated jargon and legal terms to what is really being said, and will catch illegal and unreasonable conditions. Contact our St. Louis lawyers with HKM Employment Attorneys today.