When you’ve just lost your job, signing that severance agreement on the desk in front of you is highly tempting. It likely offers a month’s salary (maybe even two or three) and an offer to pay your medical insurance until the end of the year. Before you sign, though, you need to consider what you’re giving away in exchange for the money and health coverage. Here are four primary things you need to watch out for.
Release of Future Claims
Most severance agreements require you to give up all future claims against your employer. The right to pursue legal action is not something you want to lose if, for example, you were fired after taking FMLA leave, reporting an illegal workplace practice, or making a workers compensation claim. Other illegal and discriminatory actions include terminating someone due to their status as a protected class. For example:
- Dismissing a woman after she announces her pregnancy,
- Firing someone who is of a different religious faith, or
- Terminating a disabled employee who has requested a reasonable accommodation.
If you simply sign without understanding your rights, you could lose the right to seek compensation for a wrongful dismissal.
Employment contracts often contain non-solicit and non-compete agreements that prevent you from doing the following in the event that your employment ends:
- Competing with your former company in a specific area for a certain period of time,
- Soliciting the company’s customers for their business, or
- Soliciting your former co-workers to come work for your new employer.
It sometimes happens that a severance agreement expands the scope of these restrictions and even adds new ones. Signing without reading the agreement first can limit your future employment prospects for longer than you presumed.
Non-Disparagement and References
Severance agreements typically contain a clause that prohibits you from disparaging your ex-employer. Disparagement should work both ways but the employer won’t draft the agreement in such a manner. If your agreement does not place a reciprocal restriction on the employer or even address how references will be handled, don’t sign until it does.
Money the Employer Owes
In Connecticut, there is no mandatory requirement for an employer to pay accrued but unused sick or vacation time. The employer’s policy controls, and the policy may provide that accrued but unused sick/vacation time is simply forfeited, or is payable only under certain conditions. On the other hand, earned wages must be paid promptly at the conclusion of the employment. If you’re discharged, the employer must pay you on the next business day. If you’re laid off or you quit, then the employer must pay you on the next regular pay day.
If your employer has presented you with a severance agreement and you have doubts about whether it impedes your rights or any potential claims you may have, contact Monarch Law today to discuss your options. We have the experience to negotiate a fair severance agreement that gives you the money and coverage you are entitled to without impeding your success in future employment.