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When it comes to leaving a job, whether due to termination or the end of a contract, severance agreements are often part of the process. While these agreements are designed to offer employees some financial security and other benefits after their employment ends, it’s important to know that not all severance agreements are created equally. In fact, many workers unknowingly sign bad deals that can come with long-term consequences.
As you navigate severance agreement negotiations, it’s critical to recognize the potential red flags in the agreement to avoid unfavorable terms. If you’re uncertain about the terms in your severance agreement, consulting with a severance lawyer can help ensure that your rights are protected and that you’re not agreeing to something that could harm you in the future.
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Unclear Terms About Compensation and Benefits
One of the biggest red flags in a severance agreement is a lack of clarity regarding your severance package—particularly about compensation and benefits. The agreement should clearly outline how much you’ll receive as severance pay, how it will be distributed, and how long it will last. Additionally, if health benefits or retirement plans are part of your package, the agreement should specify how long those benefits will continue after your employment ends.
If the language around compensation or benefits is vague or confusing, you could be left with less than what you’re entitled to. In this case, it’s crucial to have a severance lawyer review the terms before you agree to anything.
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Non-Compete or Non-Solicitation Clauses
Many severance agreements include non-compete agreements or non-solicitation clauses, which limit your ability to work in certain industries or solicit clients after leaving the company. While these clauses are common, they can sometimes be overly restrictive. For example, if the non-compete agreement prevents you from working in your field for several years or within a large geographic area, it could limit your ability to find new employment.
Before signing, make sure the terms of any non-compete agreement are reasonable and not overly burdensome. If the restrictions are too strict, you may want to negotiate changes or consider not signing the agreement.
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Waiving Your Right to Sue
A significant red flag in many severance agreements is a clause that asks you to waive your right to sue your employer for any future claims. While it is common for companies to ask for some form of release from liability, this clause can be problematic if it waives your right to take legal action for things like discrimination, harassment, or wrongful termination.
If the waiver is too broad or applies to claims you may not have even considered yet, it could prevent you from seeking justice in the future. It’s always a good idea to have a severance lawyer review this type of clause to ensure that you’re not signing away important rights.
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Short Timeframe for Review and Decision
Often, severance agreements come with tight deadlines for signing, sometimes as little as a few days. If you’re pressured to sign quickly, it could be a sign that the company is trying to rush you into agreeing to unfavorable terms.
You have the right to take time to review the agreement and seek legal advice. A severance lawyer can help you understand the implications of the agreement, and they can assist in changing a severance agreement if necessary.
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Lack of Specifics About Future Employment
If the agreement mentions that your employer will provide a letter of recommendation or offer help with your job search, make sure these promises are clearly outlined. If the agreement only says that the company “may” help you in the future, this is a red flag—you want a clear commitment. If the employer is offering something in return for your cooperation, it should be written down in concrete terms.
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Severance Package Revocation Clauses
Some agreements include clauses that allow the employer to revoke the severance package if certain conditions are met, such as you accepting a new job, violating a non-compete, or even bad behavior after signing the agreement. If such a clause exists, it can leave you vulnerable, especially if your employment status changes unexpectedly.
Before signing, make sure you understand under what circumstances your severance package could be revoked. Can your severance package be revoked for reasons beyond your control? If so, consult with a severance lawyer to discuss your options.
Do I Have to Sign a Severance Package?
While severance packages are often offered as part of an employee’s departure, you don’t have to sign a severance package right away. You are entitled to negotiate the terms of your agreement, and it’s often in your best interest to do so. Many people sign agreements in haste, only to realize later that they missed an opportunity to secure better compensation or more favorable terms.
If you’re unsure about any aspects of your severance agreement, don’t hesitate to consult with a severance lawyer. A legal professional can help you navigate the negotiation process, identify any red flags in the agreement, and ensure that your employees’ rights are protected.
Know Your Rights
Severance agreements can be a useful tool for employees exiting their positions, but it’s crucial to understand the terms before you sign. Watch for red flags in the agreement, like unclear compensation, restrictive clauses, or waivers of your right to sue. If you have concerns, consult with a severance lawyer to ensure that you’re making an informed decision and getting a fair deal.
Call Us
We at Filippatos PLLC stand in proud solidarity with all employees. If you are experiencing discrimination, harassment or retaliation in the workplace, please give us a call at 888-9-JOBLAW for a free consultation. We will do our utmost to help secure you the justice you deserve.