Severance Agreements

Serving Clients in Boston, the Surrounding Communities, and Throughout Massachusetts

Employers are offering departing employees severance agreements in greater frequency in recent years. These agreements typically require the employee to waive all legal claims and rights against the employer in exchange for additional compensation above and beyond any outstanding salary obligations.

If you are offered a severance agreement, it is critical to have an experienced severance agreement lawyer carefully review the proposed agreement to make sure that it is fair and equitable. Depending on the circumstances of your departure, you may be able to negotiate for more compensation than what your employer originally offers, especially if you may have a claim against the employer. Additionally, it is important to make sure that you are not being pressured to waive your rights in exchange for something your employer owes you anyway, such as accrued vacation pay.

What are the Key Components of Severance Agreements?

Severance agreements typically provide one lump sum payment for giving up all rights to sue the company.  The initial payment offered may look attractive; however, other matters should be considered, including;

  • Vacation pay due.
  • Bonuses or commissions due.
  • Overtime due.
  • Stock option matters.
  • Non-Compete provisions.  Is the company requiring you not to compete against it for some period of time?  If so, how much is that worth?
  • Whether you may have a claim against the company, such as a claim for age discrimination.

With respect to potential claims against the company, sometimes companies want to terminate older workers in certain areas so that they can make room for younger workers that may have different talents.  Simply firing older workers (those over age 40) so that younger workers can be hired is illegal.  To get around the illegality, companies will sometimes offer attractive severance packages to entice the older workers to accept the “buyout” package, rather than simply firing the older worker.

Should I Accept the Severance Offer? What are My Options?

Making a choice to accept a severance offer should be given significant consideration.  In some cases, accepting a severance agreement may be up to the employee.  As an example, a company may offer severance agreements to all workers over the age of 55, and provide a strong severance package to those who are willing accept the company’s offer.  Alternatively, a worker can refuse the offer and continue to work with the company.

Similarly, companies can offer severance packages to many workers irrespective of age as part of a reduction in force (or “RIF”).  In these cases, the affected employees will be terminated in any event; it is up to the employee whether to accept the package, or to try to negotiate  for a better outcome.  Typically, in RIF instances, unless the employee has a viable claim against the company for some wrongdoing, accepting the company’s package may be the best option.

Alternatively, if a severance agreement is offered only to you, or if you have a claim against the company (such as a claim for age discrimination), it will be important to consider whether you have leverage to negotiate a better agreement with the company, or whether to sue the company.

How We Help

As Boston severance agreement lawyers, we regularly provide advice and counseling to clients with proposed severance agreements, and we are available to help clients throughout Massachusetts. We can usually review these agreements and propose modifications or strategy options in a few hours.

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