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  • Writer's pictureDavid Manes

KM&A Severance Agreements

Exiting your job with the help of a severance lawyer will have a measurable impact on your future financial health. The first thing you need to know is that when an employer, no matter the reason for separation, hands you a severance agreement, do not sign it. A severance agreement is a contract. While you might get money, health insurance, and other benefits, your employer is receiving something extremely valuable in return. They are, in virtually every circumstance, buying back any liability that they may have accrued. Any discrimination, wage, and unlawful termination claims you once had will disappear. In fact, most severance agreements go even further and require you waive all “known and unknown” claims. In other words, it means everything possible.

They are also buying your confidentiality. You will be barred from revealing inside information to media outlets, writing negative op-eds, fomenting discord with current employees, or cooperating with attorneys looking to discover information in which to bring suit against the company. Severance lawyers are extremely savvy of the concerns of employers.

The reality is that to truly be able to bargain, you must use the unspoken “subtle threats” to your advantage. You need counsel to demonstrate that you are a serious player.

In fact, many employers are well advised to largely ignore the demands of unrepresented parties because, until they have counsel, there is virtually no threat. While this adversarial disposition may seem jarring to someone who spent faithful years at a company, this is reality. Once you leave employment, you are only a liability. Former employees either accept this reality immediately, or they will realize their error soon after the ink is dry on the severance agreement. Time and again unrepresented parties receive an extremely poor bargain.

One very important assessment is whether you have a potential legal case against the employer. Employers do a calculation. On one hand they will pay more immediately, but they also know the extreme value in risk avoidance. Don’t be deluded on the intellect, skill, and education of Human Resources individuals and their counsel. They have gone to school for exactly these situations – to end your employment with as little cost and risk to the employer as possible.

Severance lawyers also know that a “trick” employers use is to say they will not contest unemployment. That is often a farce. There are three problems; “not contesting” unemployment is extremely vague, unemployment is a state function and outside the control of the employer, and severance agreement can easily offset or negate any unemployment you may receive. Take for example that in it virtually every case, employers submit a questionnaire to unemployment. Often, this can undercut your case immediately. For example, if they said you quit or that your severance was a certain amount you could lose benefits. It is not uncommon for a former employee to be forced to attend an unemployment hearing through making simple and avoidable errors in the severance agreement.

Perhaps you should consider one avenue in which an attorney can be invaluable in the severance process. A creative severance lawyer can better define your severance agreement as a “settlement agreement” to avoid unemployment penalties. It takes work, but it is well worth it. Through our well thought our severance agreements, KM&A has saved clients saved nearly a year of unemployment benefits at approximately $570 per week. Unrepresented parties often do not grasp the pitfalls of a poorly worded severance agreement until we advise them otherwise. Clients almost unilaterally extol our severance agreements because of how much they end up receiving.

A consultation will always begin with the inquiry on “why” you are leaving your position. Is it voluntary, retirement, layoff, mutual parting of ways, or termination? The severance agreement is then conditioned on a few major pillars. First, if you were owed money under a written contract, oral agreement, or other instrument, that is your logical monetary starting point. From their, each assessment has to be individualized based on the hundreds of unique factors and concerns. You should consult an attorney for severance agreements immediately if you have any questions, concerns, or misgivings about your situations.

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